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Section 1: 10-Q (10-Q)

Document
 
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 29, 2016
 
OR 
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                     to                    .
 
Commission File No. 001-31463
 
 
DICK'S SPORTING GOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
16-1241537
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
Identification No.)
 
345 Court Street, Coraopolis, Pennsylvania 15108
(Address of Principal Executive Offices)
 
(724) 273-3400
(Registrant's Telephone Number, including Area Code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
 
The number of shares of common stock, par value $0.01 per share, and Class B common stock, par value $0.01 per share, outstanding as of November 16, 2016, was 87,936,102 and 24,710,870, respectively.


 
 

INDEX TO FORM 10-Q
 
Page Number
 
 
 
 
 
 
 
 
 
 
 
 

2

 
 

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(Amounts in thousands, except per share data)
 
 
13 Weeks Ended
 
39 Weeks Ended
 
 
October 29,
2016
 
October 31,
2015
 
October 29,
2016
 
October 31,
2015
Net sales
 
$
1,810,347

 
$
1,642,627

 
$
5,438,548

 
$
5,030,914

Cost of goods sold, including occupancy and distribution costs
 
1,257,504

 
1,154,251

 
3,792,529

 
3,519,993

 
 
 
 
 
 
 
 
 
GROSS PROFIT
 
552,843

 
488,376

 
1,646,019

 
1,510,921

 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
459,782

 
395,015

 
1,300,071

 
1,151,686

Pre-opening expenses
 
19,304

 
16,280

 
34,309

 
31,836

 
 
 
 
 
 
 
 
 
INCOME FROM OPERATIONS
 
73,757

 
77,081

 
311,639

 
327,399

 
 
 
 
 
 
 
 
 
Interest expense
 
1,265

 
1,076

 
4,014

 
2,550

Other (income) expense
 
(3,778
)
 
1,185

 
(7,775
)
 
(812
)
 
 
 
 
 
 
 
 
 
INCOME BEFORE INCOME TAXES
 
76,270

 
74,820

 
315,400

 
325,661

 
 
 
 
 
 
 
 
 
Provision for income taxes
 
27,356

 
27,605

 
118,192

 
124,262

 
 
 
 
 
 
 
 
 
NET INCOME
 
$
48,914

 
$
47,215

 
$
197,208

 
$
201,399

 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 

 
 

 
 

 
 

Basic
 
$
0.44

 
$
0.41

 
$
1.77

 
$
1.73

Diluted
 
$
0.44

 
$
0.41

 
$
1.75

 
$
1.71

 
 
 
 
 
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 

 
 

 
 

 
 

Basic
 
110,607

 
114,978

 
111,328

 
116,101

Diluted
 
111,826

 
116,506

 
112,407

 
117,739

 
 
 
 
 
 
 
 
 
Cash dividends declared per share
 
$
0.15125

 
$
0.13750

 
$
0.45375

 
$
0.41250


See accompanying notes to unaudited consolidated financial statements.

3

 
 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED
(Dollars in thousands)
 
 
13 Weeks Ended
 
39 Weeks Ended
 
 
October 29,
2016
 
October 31,
2015
 
October 29,
2016
 
October 31,
2015
NET INCOME
 
$
48,914

 
$
47,215

 
$
197,208

 
$
201,399

OTHER COMPREHENSIVE (LOSS) INCOME:
 
 

 
 

 
 

 
 

Foreign currency translation adjustment, net of tax
 
(22
)
 
(16
)
 
32

 
(52
)
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME
 
(22
)
 
(16
)
 
32

 
(52
)
COMPREHENSIVE INCOME
 
$
48,892

 
$
47,199

 
$
197,240

 
$
201,347

 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited consolidated financial statements.



4

 
 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands) 
 
October 29,
2016
 
January 30,
2016
 
October 31,
2015
ASSETS
 

 
 

 
 
CURRENT ASSETS:
 

 
 

 
 
Cash and cash equivalents
$
85,408

 
$
118,936

 
$
73,799

Accounts receivable, net
121,189

 
61,395

 
96,406

Income taxes receivable
32,583

 
5,432

 
8,719

Inventories, net
2,092,402

 
1,527,187

 
1,997,105

Prepaid expenses and other current assets
112,523

 
99,740

 
107,755

Total current assets
2,444,105

 
1,812,690

 
2,283,784

 
 
 
 
 
 
Property and equipment, net
1,492,274

 
1,347,885

 
1,341,166

Intangible assets, net
137,155

 
109,440

 
109,827

Goodwill
200,594

 
200,594

 
200,594

Other assets:
 

 
 

 
 
Deferred income taxes
5,345

 
6,165

 
20,066

Other
102,733

 
82,562

 
73,912

Total other assets
108,078

 
88,727

 
93,978

TOTAL ASSETS
$
4,382,206

 
$
3,559,336

 
$
4,029,349

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 

 
 

 
 
CURRENT LIABILITIES:
 

 
 

 
 
Accounts payable
$
1,031,587

 
$
677,864

 
$
941,973

Accrued expenses
375,553

 
289,001

 
345,052

Deferred revenue and other liabilities
146,585

 
184,386

 
133,593

Income taxes payable

 
39,835

 

Current portion of other long-term debt and leasing obligations
615

 
589

 
575

Total current liabilities
1,554,340

 
1,191,675

 
1,421,193

LONG-TERM LIABILITIES:
 

 
 

 
 
Revolving credit borrowings
260,900

 

 
342,400

Other long-term debt and leasing obligations
4,861

 
5,324

 
5,477

Deferred income taxes
8,252

 
6,454

 

Deferred revenue and other liabilities
683,988

 
566,696

 
536,973

Total long-term liabilities
958,001

 
578,474

 
884,850

COMMITMENTS AND CONTINGENCIES


 


 


STOCKHOLDERS' EQUITY:
 

 
 

 
 
Common stock
860

 
869

 
883

Class B common stock
247

 
249

 
249

Additional paid-in capital
1,114,622

 
1,063,705

 
1,053,748

Retained earnings
1,882,934

 
1,737,214

 
1,623,962

Accumulated other comprehensive loss
(147
)
 
(179
)
 
(125
)
Treasury stock, at cost
(1,128,651
)
 
(1,012,671
)
 
(955,411
)
Total stockholders' equity
1,869,865

 
1,789,187

 
1,723,306

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
4,382,206

 
$
3,559,336

 
$
4,029,349

 
 
 
 
 
 

See accompanying notes to unaudited consolidated financial statements.

5

 
 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
(Dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Class B
 
Additional
 
 
 
Other
 
 
 
 
 
Common Stock
 
Common Stock
 
Paid-In
 
Retained
 
Comprehensive
 
Treasury
 
 
 
Shares
 
Dollars
 
Shares
 
Dollars
 
Capital
 
Earnings
 
Loss
 
Stock
 
Total
BALANCE, January 30, 2016
86,850,630

 
$
869

 
24,900,870

 
$
249

 
$
1,063,705

 
$
1,737,214

 
$
(179
)
 
$
(1,012,671
)
 
$
1,789,187

Exchange of Class B common stock for common stock
190,000

 
2

 
(190,000
)
 
(2
)
 

 

 

 

 

Exercise of stock options
1,212,423

 
12

 

 

 
24,938

 

 

 

 
24,950

Restricted stock vested
428,673

 
4

 

 

 
(4
)
 

 

 

 

Minimum tax withholding requirements
(146,643
)
 
(1
)
 

 

 
(6,908
)
 

 

 

 
(6,909
)
Net income

 

 

 

 

 
197,208

 

 

 
197,208

Stock-based compensation

 

 

 

 
24,746

 

 

 

 
24,746

Total tax benefit from exercise of stock options

 

 

 

 
8,145

 

 

 

 
8,145

Foreign currency translation adjustment, net of taxes of $19

 

 

 

 

 

 
32

 

 
32

Purchase of shares for treasury
(2,580,954
)
 
(26
)
 

 

 

 

 

 
(115,980
)
 
(116,006
)
Cash dividends declared

 

 

 

 

 
(51,488
)
 

 

 
(51,488
)
BALANCE, October 29, 2016
85,954,129

 
$
860

 
24,710,870

 
$
247

 
$
1,114,622

 
$
1,882,934

 
$
(147
)
 
$
(1,128,651
)
 
$
1,869,865

 
See accompanying notes to unaudited consolidated financial statements.



6

 
 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
 
39 Weeks Ended
 
October 29,
2016
 
October 31,
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 

Net income
$
197,208

 
$
201,399

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation and amortization
149,131

 
136,683

Deferred income taxes
2,618

 
(11,112
)
Stock-based compensation
24,746

 
21,687

Excess tax benefit from exercise of stock options
(8,620
)
 
(6,308
)
Other non-cash items
541

 
442

Changes in assets and liabilities:
 

 
 

Accounts receivable
(38,002
)
 
(22,556
)
Inventories
(565,215
)
 
(606,338
)
Prepaid expenses and other assets
(10,931
)
 
(18,685
)
Accounts payable
342,369

 
324,832

Accrued expenses
67,986

 
38,817

Income taxes payable / receivable
(58,841
)
 
(36,424
)
Deferred construction allowances
114,158

 
118,647

Deferred revenue and other liabilities
(32,686
)
 
(25,215
)
Net cash provided by operating activities
184,462

 
115,869

CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Capital expenditures
(307,302
)
 
(273,962
)
Deposits and purchases of other assets
(41,946
)
 
(2,406
)
Net cash used in investing activities
(349,248
)
 
(276,368
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

Revolving credit borrowings
1,738,200

 
1,019,100

Revolving credit repayments
(1,477,300
)
 
(676,700
)
Payments on other long-term debt and leasing obligations
(437
)
 
(398
)
Construction allowance receipts

 

Proceeds from exercise of stock options
24,950

 
18,668

Excess tax benefit from exercise of stock options
8,620

 
6,309

Minimum tax withholding requirements
(6,909
)
 
(7,703
)
Cash paid for treasury stock
(116,006
)
 
(300,000
)
Cash dividends paid to stockholders
(51,246
)
 
(49,235
)
Increase in bank overdraft
11,354

 
2,630

Net cash provided by financing activities
131,226

 
12,671

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
32

 
(52
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(33,528
)
 
(147,880
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
118,936

 
221,679

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
85,408

 
$
73,799

 
 
 
 
Supplemental disclosure of cash flow information:
 

 
 

Accrued property and equipment
$
60,309

 
$
65,707

Cash paid for interest
$
3,038

 
$
1,761

Cash paid for income taxes
$
179,930

 
$
170,752

 
See accompanying notes to unaudited consolidated financial statements.

7

 
 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  Basis of Presentation

Dick's Sporting Goods, Inc. (together with its subsidiaries, referred to as "the Company", "we", "us" and "our" unless specified otherwise) is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories through a blend of dedicated associates, in-store services and unique specialty shop-in-shops. The Company also owns and operates Golf Galaxy, Field & Stream and other specialty concept stores, Dick's Team Sports HQ as well as eCommerce websites at www.DICKS.com, www.golfgalaxy.com, www.fieldandstreamshop.com and www.caliastudio.com. When used in this Quarterly Report on Form 10-Q, unless the context otherwise requires or otherwise specifies, any reference to "year" is to the Company's fiscal year.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements for Quarterly Reports on Form 10-Q and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The interim consolidated financial statements are unaudited and have been prepared on the same basis as the annual audited consolidated financial statements. In the opinion of management, such unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the interim financial information. This unaudited interim financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended January 30, 2016 as filed with the Securities and Exchange Commission on March 25, 2016. Operating results for the 13 and 39 weeks ended October 29, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending January 28, 2017 or any other period.

Recently Issued Accounting Pronouncements

Income Taxes

In October 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory". This update requires the income tax consequences of intra-entity transfers of assets other than inventory to be recognized when the intra-entity transfer occurs rather than deferring recognition of income tax consequences until the transfer was made with an outside party. ASU 2016-16 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted as of the beginning of the interim or annual reporting period. A modified retrospective approach should be applied. The Company does not expect that the adoption of this guidance will have a significant impact on the Company's Consolidated Financial Statements.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)". This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice for certain aspects under Topic 230. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted as of the beginning of the interim or annual reporting period. If early adopted, an entity must adopt all of the amendments during the same period. The Company does not expect that the adoption of this guidance will have a significant impact on the Company's Consolidated Financial Statements.

Stock Compensation

In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting". This update simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016, with early application permitted. If early adopted, an entity must adopt all of the amendments during the same period. The Company is currently evaluating the impact of the adoption of ASU 2016-09 on the Company's Consolidated Financial Statements.


8

 
 
 
 
 
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Leases

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)". This update requires an entity to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity's leasing arrangements. ASU 2016-02 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2018, with early application permitted. A modified retrospective approach is required. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on the Company's Consolidated Financial Statements.

Measurement of Inventory

In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory". This update requires an entity that determines the cost of inventory by methods other than last-in, first-out (LIFO) and the retail inventory method (RIM) to measure inventory at the lower of cost and net realizable value. ASU 2015-11 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. Prospective application is required. Early application is permitted as of the beginning of the interim or annual reporting period. The Company does not expect that the adoption of this guidance will have a significant impact on the Company's Consolidated Financial Statements.

Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers". This update requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, the update (1) specifies the accounting for some costs to obtain or fulfill a contract with a customer and (2) expands disclosure requirements related to revenue and cash flows arising from contracts with customers. In August 2015, the FASB subsequently issued ASU 2015-14, "Revenue from Contracts with Customers - Deferral of the Effective Date", which approved a one year deferral of ASU 2014-09 for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.

In March 2016 and April 2016, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net)", and ASU 2016-10, "Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing", respectively, which further clarify the guidance related to those specific topics within ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, "Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients", to reduce the risk of diversity in practice for certain aspects in ASU 2014-09, including collectibility, noncash consideration, presentation of sales tax and transition. These updates permit the use of either the retrospective or cumulative effect transition method. Early application is permitted as of the original effective date for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating which transition approach it will utilize and the impact these standards will have on the Company's Consolidated Financial Statements upon adoption.

Reclassifications

Certain reclassifications have been made to prior year amounts for the period ended October 31, 2015 within the Consolidated Balance Sheets to conform to current year presentation.

2.  Store Closings
 
The calculation of accrued store closing and relocation reserves primarily includes future minimum lease payments, maintenance costs and taxes from the date of closure or relocation to the end of the remaining lease term, net of contractual or estimated sublease income. The liability is discounted using a credit-adjusted risk-free rate of interest. The assumptions used in the calculation of the accrued store closing and relocation reserves are evaluated each quarter.
 

9

 
 
 
 
 
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table summarizes the activity in fiscal 2016 and 2015 (in thousands):
 
 
39 Weeks Ended
 
 
October 29,
2016
 
October 31,
2015
Accrued store closing and relocation reserves, beginning of period
 
$
11,702

 
$
12,785

Expense charged to earnings
 
3,039

 
3,451

Cash payments
 
(4,121
)
 
(3,427
)
Interest accretion and other changes in assumptions
 
(697
)
 
(115
)
Accrued store closing and relocation reserves, end of period
 
9,923

 
12,694

Less: current portion of accrued store closing and relocation reserves
 
(4,623
)
 
(4,577
)
Long-term portion of accrued store closing and relocation reserves
 
$
5,300

 
$
8,117


3.  Earnings Per Common Share
 
Basic earnings per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock outstanding, plus the effect of dilutive potential common shares outstanding during the period, using the treasury stock method. Dilutive potential common shares are stock-based awards, which include outstanding stock options, restricted stock and warrants.

The computations for basic and diluted earnings per common share are as follows (in thousands, except per share data): 
 
 
13 Weeks Ended
 
39 Weeks Ended
 
 
October 29,
2016
 
October 31,
2015
 
October 29,
2016
 
October 31,
2015
Net income
 
$
48,914

 
$
47,215

 
$
197,208

 
$
201,399

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic
 
110,607

 
114,978

 
111,328

 
116,101

Dilutive effect of stock-based awards
 
1,219

 
1,528

 
1,079

 
1,638

Weighted average common shares outstanding - diluted
 
111,826

 
116,506

 
112,407

 
117,739

 
 
 
 
 
 
 
 
 
Earnings per common share - basic
 
$
0.44

 
$
0.41

 
$
1.77

 
$
1.73

Earnings per common share - diluted
 
$
0.44

 
$
0.41

 
$
1.75

 
$
1.71

 
 
 
 
 
 
 
 
 
Anti-dilutive stock-based awards excluded from diluted calculation
 
921

 
1,405

 
2,129

 
1,181


4.  Fair Value Measurements
 
Accounting Standard Codification ("ASC") 820, "Fair Value Measurement and Disclosures", outlines a valuation framework and creates a fair value hierarchy for assets and liabilities as follows:

Level 1:
Observable inputs such as quoted prices in active markets;
 
Level 2:
Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
 
Level 3:
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 

10

 
 
 
 
 
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Assets measured at fair value on a recurring basis as of October 29, 2016 and January 30, 2016 are set forth in the table below (in thousands):
 
Level 1
Description
October 29,
2016
 
January 30,
2016
Assets:
 
 
 
Deferred compensation plan assets held in trust (1)
$
63,190

 
$
53,040

Total assets
$
63,190

 
$
53,040

 
 
 
 

(1) 
Consists of investments in various mutual funds made by eligible individuals as part of the Company's deferred compensation plans.

The fair value of cash and cash equivalents, accounts receivable, accounts payable, revolving credit borrowings and certain other liabilities approximated book value due to the short-term nature of these instruments at both October 29, 2016 and January 30, 2016.
 
The Company uses quoted prices in active markets to determine the fair value of the aforementioned assets determined to be Level 1 instruments. The Company's policy for recognition of transfers between levels of the fair value hierarchy is to recognize any transfer at the end of the fiscal quarter in which the determination to transfer was made. The Company did not transfer any assets or liabilities among the levels within the fair value hierarchy during the 39 weeks ended October 29, 2016 or the fiscal year ended January 30, 2016. Additionally, the Company did not hold any Level 2 or Level 3 assets or liabilities during the 39 weeks ended October 29, 2016 or the fiscal year ended January 30, 2016.

5. Intangible Assets

On July 20, 2016, the Company purchased intellectual property assets of The Sports Authority ("TSA") along with the right to acquire 31 TSA store leases, for $18.2 million, net of lease sale proceeds. The Company retained 22 of these store leases. The TSA intellectual property assets, which include the name "The Sports Authority", TSA's domain names, TSA's owned trademarks and customer information, and lease designation rights are finite-lived intangible assets and will be amortized over each asset's designated useful life.

6.  Subsequent Events
 
On November 2, 2016, the Company completed its purchase for certain assets of Golfsmith International Holdings, Inc. ("Golfsmith"), including intellectual property and rights to acquire store leases, together with inventory for 30 stores. The purchase price was approximately $43 million, of which $32 million is related to inventory. Intellectual property includes the name "Golfsmith", as well as Golfsmith's domain names, owned trademarks and customer information.

On November 10, 2016, the Company's Board of Directors authorized and declared a quarterly cash dividend in the amount of $0.15125 per share of common stock and Class B common stock payable on December 30, 2016 to stockholders of record as of the close of business on December 9, 2016.


11

 
 

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
FORWARD-LOOKING STATEMENTS
 
We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Quarterly Report on Form 10-Q or made by our management involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. These statements can be identified as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as "believe", "anticipate", "expect", "estimate", "predict", "intend", "plan", "project", "goal", "will", "will be", "will continue", "will result", "could", "may", "might" or any variations of such words or other words with similar meanings. Forward-looking statements include statements regarding, among other things, our expectations and growth strategies, including our plans to open new stores and relocate existing stores, develop our own eCommerce platform, and grow our private brand business; our efforts to increase profit margins and return on invested capital; the potential benefit and integration of strategic acquisitions; projections of our future profitability, results of operations, financial condition, growth, market opportunities, competition, capital expenditures, including continuing to invest in the improvement of our supply chain and corporate information technology infrastructure and beginning construction of our fifth distribution facility in fiscal 2016, and other expectations and targets for future periods; plans to return capital to stockholders through dividends and share repurchases; and outstanding borrowing in future periods.

The following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results, and could cause actual results for fiscal 2016 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this Quarterly Report on Form 10-Q or otherwise made by our management:

The dependence of our business on consumer discretionary spending;

Intense competition in the sporting goods industry and in retail;
 
Our ability to predict or effectively react to changes in consumer demand or shopping patterns;

Lack of available retail store sites on terms acceptable to us, rising real estate prices and other costs and risks relating to a brick and mortar retail store model;
 
Omni-channel growth and the transition to our eCommerce platform producing the anticipated benefits within the expected time-frame or at all;

Our pursuit of strategic investments or acquisitions, including the timing and costs of such investments and acquisitions and the integration of acquired businesses and / or companies being more difficult, time-consuming, or costly than expected;

Unauthorized disclosure of sensitive or confidential customer information;

Risks associated with our private brand offerings and new retail concept stores;

Disruption of or other problems with the services provided by our current primary eCommerce services provider;

Our ability to access adequate capital to operate and expand our business and to respond to changing business and economic conditions;

Risks and costs relating to changing laws and regulations affecting our business, including consumer products, firearms and ammunition, data protection and privacy;

Our relationships with our vendors or disruptions in our or our vendors' supply chains, which could be caused by foreign trade issues, currency exchange rate fluctuations, increasing prices for raw materials or foreign political instability;

Litigation risks for which we may not have sufficient insurance or other coverage;

12

 
 

Product costs being adversely affected by foreign trade issues, currency exchange rate fluctuations, increasing prices for raw materials, political instability or other reasons;

Our ability to attract, train, engage and retain qualified leaders and associates and the loss of Mr. Edward Stack as our Chairman and Chief Executive Officer;

Our ability to secure and protect our trademarks and other intellectual property and defend claims of intellectual property infringement;

Disruption of or other problems with our information systems;

Disruption at our distribution facilities;
 
Wage increases, which could adversely affect our financial results;

Performance of professional sports teams, professional team lockouts or strikes, retirement or scandal involving sports superstars;

Weather-related disruptions and the seasonality of our business, as well as the current geographic concentration of Dick's Sporting Goods stores;

We are controlled by our Chairman and Chief Executive Officer and his relatives, whose interests may differ from those of our other stockholders;

Our current anti-takeover provisions, which could prevent or delay a change in control of the Company; and
 
Our current intention to issue quarterly cash dividends, and our repurchase activity, if any, pursuant to our share repurchase program.

The foregoing and additional risk factors are described in more detail in other reports or filings filed or furnished by us with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended January 30, 2016, filed on March 25, 2016. In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. The forward-looking statements included in this Quarterly Report on Form 10-Q are made as of this date. We do not assume any obligation and do not intend to update or revise any forward-looking statements whether as a result of new information, future developments or otherwise except as may be required by the securities laws.

OVERVIEW

The Company is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories through a blend of dedicated associates, in-store services and unique specialty shop-in-shops. The Company also owns and operates Golf Galaxy, Field & Stream and other specialty concept stores, Dick's Team Sports HQ as well as eCommerce websites at www.DICKS.com, www.golfgalaxy.com, www.fieldandstreamshop.com and www.caliastudio.com. When used in this Quarterly Report on Form 10-Q, unless the context otherwise requires or otherwise specifies, any reference to "year" is to the Company's fiscal year.

The primary factors that have historically influenced the Company's profitability and success have been the growth in its number of stores and selling square footage, the integration of eCommerce with its brick and mortar stores, positive consolidated same store sales, which include the Company's eCommerce business, and its strong gross profit margins. For example, in the last five years the Company has grown from 474 Dick's Sporting Goods stores as of October 29, 2011 to 676 Dick's Sporting Goods stores as of October 29, 2016. Additionally, the Company's eCommerce sales penetration to total net sales has increased from 2.6% to 9.1% for the year-to-date period ended October 29, 2011 and October 29, 2016, respectively.


13

 
 

In recent years, the Company has innovated its eCommerce sites with enhancements in the customer experience, new releases of its mobile and tablet sites, and development of capabilities that integrate the Company's online presence with its brick and mortar stores, including ship-from-store; buy-online, pick-up in-store; return-to-store and multi-faceted marketing campaigns that are consistent across the stores and eCommerce websites. On average, approximately 80% of the Company's eCommerce sales are generated within brick and mortar store trade areas.

The Company's senior management focuses on certain key indicators to monitor the Company's performance including:

Consolidated same store sales performance – Our management considers same store sales, which consists of both brick and mortar and eCommerce sales, to be an important indicator of our current performance. Same store sales results are important to leverage our costs, which include occupancy costs, store payroll and other store expenses. Same store sales also have a direct impact on our total net sales, cash and working capital. A store is included in the same store sales calculation during the same fiscal period that it commences its 14th full month of operations. Stores that were closed or relocated during the applicable period have been excluded from same store sales. Each relocated store is returned to the same store sales base during the fiscal period that it commences its 14th full month of operations at the new location. See further discussion of our consolidated same store sales in the "Results of Operations and Other Selected Data" section herein.

Operating cash flow – Cash flow generation supports the general operating needs of the Company and funds capital expenditures related to its omni-channel platform, distribution and administrative facilities, costs associated with continued improvement of information technology tools, costs associated with potential strategic acquisitions or investments that may arise from time to time and stockholder return initiatives, including cash dividends and share repurchases. We typically generate significant positive operating cash flows and proportionately higher net income levels in our fiscal fourth quarter in connection with the holiday selling season and in part to sales of cold weather sporting goods and apparel. See further discussion of the Company's cash flows in the "Liquidity and Capital Resources and Changes in Financial Condition" section herein.

Quality of merchandise offerings – To measure acceptance of its merchandise offerings, the Company monitors sell-throughs, inventory turns, gross margins and markdown rates on a department and style level. This analysis helps the Company manage inventory levels to reduce cash flow requirements and deliver optimal gross margins by improving merchandise flow and establishing appropriate price points to minimize markdowns.

Store productivity – To assess store-level performance, the Company monitors various indicators, including new store productivity, sales per square foot, store operating contribution margin and store cash flow.
 
CRITICAL ACCOUNTING POLICIES
 
As discussed in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2016, filed with the Securities and Exchange Commission on March 25, 2016, the Company considers its policies on inventory valuation, vendor allowances, goodwill and intangible assets, impairment of long-lived assets and closed store reserves, self-insurance reserves, stock-based compensation and uncertain tax positions to be the most critical in understanding the judgments that are involved in preparing the Company's consolidated financial statements. There have been no changes in the Company's critical accounting policies during the quarter ended October 29, 2016.

RESULTS OF OPERATIONS AND OTHER SELECTED DATA

Executive Summary
 
Earnings per diluted share of $0.44 in the current quarter increased compared to earnings per diluted share of $0.41 during the third quarter of 2015.

Net income in the current quarter includes $4.7 million, net of tax, or $0.04 per diluted share, of costs incurred by the Company to convert 22 The Sports Authority ("TSA") stores to Dick's Sporting Goods stores.

Net income in the third quarter of 2015 included $4.7 million, net of tax, or $0.04 per diluted share, related to a litigation settlement charge.


14

 
 

Net sales increased 10% to $1.8 billion in the current quarter compared to the third quarter of 2015, due primarily to the growth of our store network and a 5.2% increase in consolidated same store sales.

eCommerce sales penetration in the current quarter increased to 9.6% of total net sales compared to 8.0% in the third quarter of 2015.

Gross profit increased to 30.54% as a percentage of net sales in the current quarter from 29.73% during the third quarter of 2015.

Selling, general and administrative expenses increased 16% to $459.8 million in the current quarter compared to the third quarter of 2015.

Other income increased to $3.8 million in the current quarter compared to $1.2 million of expense during the third quarter of 2015. The Company recorded a $2.9 million benefit related to a multi-year sales tax refund in the current quarter.

In the third quarter of 2016, the Company:

Declared and paid a quarterly cash dividend in the amount of $0.15125 per share of common stock and Class B common stock.

Repurchased approximately 0.2 million shares of common stock for $9.0 million.

The following table summarizes store openings and closings for the periods indicated:
 
39 Weeks Ended 
 October 29, 2016
 
39 Weeks Ended 
 October 31, 2015
 
Dick's Sporting Goods
 
Specialty Store Concepts (1)
 
Total
 
Dick's Sporting Goods
 
Specialty Store Concepts (1)
 
Total
Beginning stores
644

 
97

 
741

 
603

 
91

 
694

Q1 New stores
3

 
2

 
5

 
9

 
1

 
10

Q2 New stores
5

 

 
5

 
7

 
1

 
8

Q3 New stores
27

 
9

 
36

 
27

 
9

 
36

Ending stores
679

 
108

 
787

 
646

 
102

 
748

 
 
 
 
 
 
 
 
 
 
 
 
Closed stores
3

 
2

 
5

 
1

 
3

 
4

Ending stores
676

 
106

 
782

 
645

 
99

 
744

 
 
 
 
 
 
 
 
 
 
 
 
Relocated stores
9

 

 
9

 
6

 
1

 
7

 
(1) 
Includes the Company's Golf Galaxy, Field & Stream and other specialty concept stores. In some markets we operate adjacent stores on the same property with a pass-through for customers. We refer to this format as a "combo store" and include combo store openings within both the Dick's Sporting Goods and specialty store concept reconciliations, as applicable. As of October 29, 2016, the Company operated 74 Golf Galaxy stores and 27 Field & Stream stores.


15

 
 

The following tables present for the periods indicated selected items in the unaudited Consolidated Statements of Income as a percentage of the Company's net sales, as well as the basis point change in the percentage of net sales from the prior year's period. In addition, other data is provided to facilitate a further understanding of our business. These tables should be read in conjunction with Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the accompanying unaudited Consolidated Financial Statements and related notes thereto.
 
 
 
 
 
Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Year 2015-2016
 
13 Weeks Ended
 
 
October 29,
2016
 
October 31,
2015
 
Net sales (1)
100.00
%
 
100.00
%
 
N/A
Cost of goods sold, including occupancy and distribution costs (2)
69.46

 
70.27

 
(81)
Gross profit
30.54

 
29.73

 
81
Selling, general and administrative expenses (3)
25.40

 
24.05

 
135
Pre-opening expenses (4)
1.07

 
0.99

 
8
Income from operations
4.07

 
4.69

 
(62)
Interest expense
0.07

 
0.07

 
Other (income) expense
(0.21
)
 
0.07

 
(28)
Income before income taxes
4.21

 
4.55

 
(34)
Provision for income taxes
1.51

 
1.68

 
(17)
Net income
2.70
%
 
2.87
%
 
(17)
 
 
 
 
 
 
Other Data:
 

 
 

 
 
Consolidated same store sales increase
5.2
%
 
0.4
%
 
 
Number of stores at end of period (5)
782

 
744

 
 
Total square feet at end of period (5)
38,788,672

 
36,775,761

 
 

 
 
 
 
 
Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Year 2015-2016 (A)
 
39 Weeks Ended
 
 
October 29,
2016 (A)
 
October 31,
2015 (A)
 
Net sales (1)
100.00
%
 
100.00
%
 
N/A
Cost of goods sold, including occupancy and distribution costs (2)
69.73

 
69.97

 
(24)
Gross profit
30.27

 
30.03

 
24
Selling, general and administrative expenses (3)
23.90

 
22.89

 
101
Pre-opening expenses (4)
0.63

 
0.63

 
Income from operations
5.73

 
6.51

 
(78)
Interest expense
0.07

 
0.05

 
2
Other income
(0.14
)
 
(0.02
)
 
(12)
Income before income taxes
5.80

 
6.47

 
(67)
Provision for income taxes
2.17

 
2.47

 
(30)
Net income
3.63
%
 
4.00
%
 
(37)
 
 
 
 
 
 
Other Data:
 

 
 

 
 
Consolidated same store sales increase
2.9
%
 
0.9
%
 
 
Number of stores at end of period (5)
782

 
744

 
 
Total square feet at end of period (5)
38,788,672

 
36,775,761

 
 

(A) 
Column does not add due to rounding.


16

 
 

(1) 
Revenue from retail sales is recognized at the point of sale, net of sales tax. Revenue from eCommerce sales is recognized upon shipment of merchandise. Service-related revenue is recognized as the services are performed. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded. Revenue from gift cards and returned merchandise credits (collectively the "cards") is deferred and recognized upon the redemption of the cards. These cards have no expiration date. Income from unredeemed cards is recognized on the unaudited Consolidated Statements of Income within 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 becomes remote.

(2) 
Cost of goods sold includes: the cost of merchandise (inclusive of vendor allowances, inventory shrinkage and inventory write-downs for the lower of cost or market); freight; distribution; shipping; and store occupancy costs. The Company defines merchandise margin as net sales less the cost of merchandise sold. Store occupancy costs include rent, common area maintenance charges, real estate and other asset-based taxes, general 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 operating the Company's corporate headquarters.

(4) 
Pre-opening expenses, which consist primarily of rent, marketing, payroll and recruiting costs, are expensed as incurred. Rent is recognized within pre-opening expense from the date of building turnover to the Company through the date of store opening.

(5) 
Includes Dick's Sporting Goods, Golf Galaxy, Field & Stream and other specialty concept stores.

13 Weeks Ended October 29, 2016 Compared to the 13 Weeks Ended October 31, 2015
 
Net Sales

Net sales increased 10% in the current quarter to $1.8 billion from $1.6 billion for the quarter ended October 31, 2015, due primarily to the growth of our store network and a 5.2% increase in consolidated same store sales. The 5.2% increase in consolidated same store sales contributed $80.6 million of the increase in net sales for the quarter ended October 29, 2016. The remaining $87.1 million increase in net sales was attributable to new stores. The 5.2% increase in consolidated same store sales consisted of a 5.5% increase at Dick's Sporting Goods and a 3.3% decrease at Golf Galaxy. eCommerce sales penetration increased to 9.6% of total net sales during the current quarter compared to 8.0% of total net sales during the quarter ended October 31, 2015, representing an approximate increase of 33% in eCommerce sales.

The increase in consolidated same store sales was driven by broad-based increases across our hardlines, apparel and footwear categories, most notably the outdoor business and licensed apparel, which benefited from favorable teams participating in the Major League Baseball playoffs in the current quarter. These gains were partially offset by declines in sales of cold-weather merchandise due to unseasonably warm temperatures later in the quarter. The same store sales increase at Dick's Sporting Goods was driven by an increase in transactions of approximately 4.2% and an increase in sales per transaction of approximately 1.3%.

Income from Operations
 
Income from operations decreased to $73.8 million in the current quarter from $77.1 million for the quarter ended October 31, 2015.
 
Gross profit increased 13% to $552.8 million in the current quarter from $488.4 million for the quarter ended October 31, 2015, and increased as a percentage of net sales by 81 basis points compared to the same period last year. Merchandise margins and occupancy costs improved during the quarter and were partially offset by increased shipping expenses. Merchandise margins were favorably impacted by lower promotional activity in the current quarter. Occupancy costs increased $17.7 million in the current quarter from the quarter ended October 31, 2015. Our occupancy costs, which after the cost of merchandise represent our largest expense within cost of goods sold, are generally fixed in nature and fluctuate based on the number of stores that we operate. As a percentage of net sales, occupancy costs increased at a lower rate than the 10% increase in net sales during the current quarter. The increase in shipping expenses during the current quarter was primarily due to the growth and increased penetration of eCommerce sales as compared to the Company's total net sales.


17

 
 

Selling, general and administrative expenses increased 16% to $459.8 million in the current quarter from $395.0 million for the quarter ended October 31, 2015, and increased as a percentage of net sales by 135 basis points. The current quarter includes costs incurred by the Company to convert TSA stores to Dick's Sporting Goods stores totaling $6.5 million. The quarter ended October 31, 2015 included a litigation settlement charge of $7.9 million. Apart from the enumerated items, selling, general and administrative expenses increased as a percentage of net sales by 147 basis points, due primarily to higher administrative, payroll, incentive compensation and benefit costs, investments in our Olympics marketing campaign and higher store payroll costs as the Company continued to invest to enhance the shopping experience within its stores compared to the same period last year.

Pre-opening expenses increased to $19.3 million in the current quarter from $16.3 million for the quarter ended October 31, 2015. Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations. The current quarter includes costs incurred by the Company to convert TSA stores to Dick's Sporting Goods stores totaling $1.1 million. Pre-opening rent expenses for our self-developed store sites will generally exceed those for sites built to our specifications by our landlords as we commence recognition of rent expense when we take possession of a site.

Other (Income) Expense

Other income increased to $3.8 million in the current quarter compared to $1.2 million of expense for the quarter ended October 31, 2015. The Company recognizes investment income / expense to reflect changes in deferred compensation plan investment values with a corresponding charge / reduction to selling, general and administrative costs for the same amount. The Company recognized investment income totaling $0.8 million in the current quarter compared to an investment loss of $2.2 million for the quarter ended October 31, 2015, primarily driven by an overall improvement in the equity markets, which impacted the deferred compensation plan investment values. Additionally, during the current quarter, the Company recorded a $2.9 million benefit from a multi-year sales tax refund.

Income Taxes
 
The Company's effective tax rate decreased to 35.9% for the current quarter from 36.9% for the quarter ended October 31, 2015 primarily due to the partial reversal of a valuation allowance as a result of realizing capital gains in the current quarter.

39 Weeks Ended October 29, 2016 Compared to the 39 Weeks Ended October 31, 2015

Net Sales

Net sales increased 8% in the current period to $5.4 billion from $5.0 billion for the period ended October 31, 2015, due primarily to the growth of our store network and a 2.9% increase in consolidated same store sales. The 2.9% increase in consolidated same store sales contributed $137.5 million of the increase in net sales for the period ended October 29, 2016. The remaining $270.1 million increase in net sales was attributable to new stores. The 2.9% increase in consolidated same store sales consisted of a 3.0% increase at Dick's Sporting Goods and a 2.2% decrease at Golf Galaxy. eCommerce sales penetration was 9.1% of total net sales during the current period compared to 7.9% of total net sales during the period ended October 31, 2015, representing an approximate increase of 24% in eCommerce sales.

The increase in consolidated same store sales was driven by broad-based increases across our hardlines, apparel and footwear categories. The same store sales increase at Dick's Sporting Goods was driven by an increase in transactions of approximately 1.8% and an increase in sales per transaction of approximately 1.2%.

Income from Operations

Income from operations decreased to $311.6 million in the current period from $327.4 million for the period ended October 31, 2015.

Gross profit increased 9% to $1,646.0 million for the current period from $1,510.9 million for the period ended October 31, 2015, and increased as a percentage of net sales by 24 basis points compared to the same period last year. Merchandise margins and occupancy costs improved during the period and were partially offset by increased shipping expenses. Occupancy costs increased $47.4 million in the current period from the period ended October 31, 2015. Our occupancy costs, which after the cost of merchandise represent our largest expense within cost of goods sold, are generally fixed in nature and fluctuate based on the number of stores that we operate. As a percentage of net sales, occupancy costs increased at a lower rate than the 8% increase in net sales during the current period. The increase in shipping expenses during the current period was primarily due to the growth and increased penetration of eCommerce sales as compared to the Company's total net sales.

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Selling, general and administrative expenses increased 13% to $1,300.1 million in the current period from $1,151.7 million for the period ended October 31, 2015, and increased as a percentage of net sales by 101 basis points. The current period includes costs incurred by the Company to convert TSA stores to Dick's Sporting Goods stores totaling $6.5 million. The period ended October 31, 2015 included a litigation settlement charge of $7.9 million. Apart from the enumerated items, selling, general and administrative expenses increased as a percentage of net sales by 105 basis points, due primarily to higher administrative, payroll, incentive compensation and benefit costs and higher store payroll costs as the Company continued to invest to enhance the shopping experience within its stores compared to the same period last year.

Pre-opening expenses increased to $34.3 million in the current period from $31.8 million for the period ended October 31, 2015. Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations. The current period includes costs incurred by the Company to convert TSA stores to Dick's Sporting Goods stores totaling $1.1 million. Pre-opening rent expenses for our self-developed store sites will generally exceed those for sites built to our specifications by our landlords as we commence recognition of rent expense when we take possession of a site.

Other Income

Other income increased to $7.8 million in the current period compared to $0.8 million of income for the period ended October 31, 2015. The Company recognizes investment income / expense to reflect changes in deferred compensation plan investment values with a corresponding charge / reduction to selling, general and administrative costs for the same amount. The Company recognized investment income totaling $4.6 million in the current period compared to an investment loss of $0.4 million for the period ended October 31, 2015, primarily driven by an overall improvement in the equity markets, which impacted the deferred compensation plan investment values. Additionally, during the current period, the Company recorded a $2.9 million benefit from a multi-year sales tax refund.

Income Taxes

The Company's effective tax rate decreased to 37.5% for the current period from 38.2% for the same period last year primarily due to the partial reversal of a valuation allowance as a result of realizing capital gains in the current period.

LIQUIDITY AND CAPITAL RESOURCES AND CHANGES IN FINANCIAL CONDITION

Overview
 
The Company's liquidity and capital needs have generally been met by cash from operating activities with additional liquidity from the Company's revolving credit facility. 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-holiday inventory increase being the largest. In the fourth quarter, inventory levels are reduced in connection with sales during the holiday season and this inventory reduction, combined with proportionately higher net income, typically produces significant positive cash flow.

The Company has a $1 billion revolving senior secured credit facility, including up to $150 million in the form of letters of credit, (the "Credit Agreement") in the event further liquidity is needed. Under the Credit Agreement, subject to the satisfaction of certain conditions, the Company may request an increase of up to $250 million in borrowing availability.

The Company generally utilizes its Credit Agreement for working capital needs based primarily on the seasonal nature of its operating cash flows, with the Company's peak borrowings occurring during its third quarter as the Company increases inventory in advance of the holiday selling season.

Liquidity information for the periods ended (dollars in thousands):
 
October 29,
2016
 
October 31,
2015
Funds drawn on Credit Agreement
$
1,738,200

 
$
1,019,100

Number of days with outstanding balance on Credit Agreement
163 days

 
94 days

Maximum daily amount outstanding under Credit Agreement
$
298,700

 
$
342,400

 
 
 
 


19

 
 

In the table above, the increase in funds drawn on our Credit Agreement during the 39 weeks ended October 29, 2016 compared to the same period in fiscal 2015 was driven by continued capital return to stockholders and investments in the Company's growth.

Liquidity information as of (dollars in thousands):
 
October 29,
2016
 
October 31,
2015
Outstanding borrowings under Credit Agreement
$
260,900

 
$
342,400

Cash and cash equivalents
$
85,408

 
$
73,799

Remaining borrowing capacity under Credit Agreement
$
724,469

 
$
643,569

Outstanding letters of credit under Credit Agreement
$
14,631

 
$
14,031

 
 
 
 

The Company intends to allocate capital to invest in its future growth, specifically the development of its omni-channel platform and specialty store concepts, as well as to return capital to stockholders through dividends and share repurchases. 

Capital expenditures – We expect capital expenditures to be approximately $275 million on a net basis, which includes tenant allowances provided by landlords, and approximately $450 million on a gross basis in fiscal 2016. Normal capital requirements primarily relate to the development of our omni-channel platform, including investments in new and existing stores and eCommerce technology. The Company also plans to continue to invest in the improvement of its supply chain and corporate information technology infrastructure. We plan to open 49 new stores and begin construction of our 5th distribution facility in fiscal 2016. We expect our new stores, as well as investments in our existing stores, to represent the majority of our total capital expenditures during fiscal 2016. The Company has a capital appropriations committee that approves all capital expenditures in excess of certain amounts and groups and prioritizes all capital projects among required, discretionary and strategic categories.

Share repurchases – On March 7, 2013, the Company's Board of Directors authorized a five-year share repurchase program of up to $1 billion of the Company's common stock. Since the beginning of 2013, we have repurchased $928.9 million of common stock and have $71.1 million remaining under this authorization. On March 16, 2016, the Company's Board of Directors authorized an additional five-year share repurchase program of up to $1 billion of the Company's common stock. During the 39 weeks ended October 29, 2016, the Company repurchased approximately 2.6 million shares of its common stock for $116.0 million. Any future share repurchase programs are subject to the final determination of our Board of Directors and will be dependent upon future earnings, cash flows, financial requirements and other factors.
 
Dividends – During the 39 weeks ended October 29, 2016, the Company paid $51.2 million of dividends to its stockholders. The declaration of future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to authorization by our Board of Directors and will be dependent upon future earnings, cash flows, financial requirements and other factors.

The Company currently believes cash flows generated by operations and funds available under its Credit Agreement will be sufficient to satisfy capital requirements, including planned capital expenditures, share repurchases and quarterly dividend payments to its stockholders through fiscal 2016. The Company may require additional funding should the Company pursue strategic acquisitions or undertake share repurchases, other investments or store expansion rates in excess of those presently planned.

Changes in cash and cash equivalents are as follows (in thousands):
 
39 Weeks Ended
 
October 29,
2016
 
October 31,
2015
Net cash provided by operating activities
$
184,462

 
$
115,869

Net cash used in investing activities
(349,248
)
 
(276,368
)
Net cash provided by financing activities
131,226

 
12,671

Effect of exchange rate changes on cash and cash equivalents
32

 
(52
)
Net decrease in cash and cash equivalents
$
(33,528
)
 
$
(147,880
)

20

 
 

Operating Activities

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 and 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 and income taxes payable / receivable, as well as other working capital changes.
 
Cash provided by operating activities increased $68.6 million for the 39 weeks ended October 29, 2016 compared to the same period last year. The increase in cash provided by operating activities was due primarily to a $45.8 million increase in operating assets and liabilities and a $27.0 million increase in non-cash items, partially offset by a $4.2 million decrease in net income period-over-period.

The increase in operating assets and liabilities was due primarily to the following:

Changes in inventory and accounts payable increased operating cash flows by $58.7 million compared to the prior year, primarily due to timing of inventory receipts.

Changes in accrued expenses increased operating cash flows by $29.2 million compared to the prior year, primarily due to lower incentive compensation accruals in fiscal 2015 that were subsequently paid during the first quarter of fiscal 2016, compared to those balances accrued at the end of fiscal 2014 and subsequently paid during the first quarter of fiscal 2015.

Changes in accounts receivable decreased operating cash flows by $15.4 million compared to the prior year, primarily due to timing of collections associated with vendor funded store initiatives.
 
Investing Activities
 
Cash used in investing activities increased $72.9 million for the 39 weeks ended October 29, 2016 compared to the same period last year primarily due to a $39.5 million increase in deposits and other assets coupled with a $33.4 million increase in gross capital expenditures. The increase in deposits and other assets was primarily driven by the Company's acquisition of TSA intellectual property and lease designation rights in the current period as well as Affinity Sports, a sports management technology company. The increase in gross capital expenditures was primarily driven by incremental investments related to the Company's full-service footwear store initiative.

Financing Activities

Cash provided by financing activities consists primarily of the Company's capital return initiatives, including its share repurchase program and cash dividend payments, and cash flows generated from stock option exercises. Cash provided by financing activities for the 39 weeks ended October 29, 2016 totaled $131.2 million compared to $12.7 million for the comparable period of the prior year. The Company repurchased $184.0 million fewer shares which was partially offset by lower net Credit Agreement borrowings during the period ended October 29, 2016 compared to the prior year period.

Events Subsequent to Quarter-end
 
On November 2, 2016, the Company completed its purchase of certain assets of Golfsmith International Holdings, Inc. ("Golfsmith"), including intellectual property and rights to acquire store leases, together with inventory for 30 stores. The purchase price was approximately $43 million, of which $32 million is related to inventory. Intellectual property includes the name "Golfsmith", as well as Golfsmith's domain names, owned trademarks and customer information.

On November 10, 2016, the Company's Board of Directors authorized and declared a quarterly cash dividend in the amount of $0.15125 per share of common stock and Class B common stock payable on December 30, 2016 to stockholders of record as of the close of business on December 9, 2016.

21

 
 

Off-Balance Sheet Arrangements

The Company's off-balance sheet arrangements as of October 29, 2016 primarily relate to store operating leases and purchase obligations for marketing commitments, including naming rights, licenses for trademarks, corporate aircraft and technology-related and other commitments. The Company has excluded these items from the unaudited Consolidated Balance Sheets in accordance with generally accepted accounting principles. The Company does not believe that any of these arrangements have, or are reasonably likely to have, a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or resources.

Contractual Obligations and Other Commercial Commitments
 
The Company is party to many contractual obligations that involve commitments to make payments to third parties in the ordinary course of business. For a description of the Company's contractual obligations and other commercial commitments as of January 30, 2016, see the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2016, filed with the Securities and Exchange Commission on March 25, 2016. During the current quarter, there were no material changes with respect to these contractual obligations and other commercial commitments outside the ordinary course of business.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company's market risk exposures from those reported in the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2016 filed with the Securities and Exchange Commission on March 25, 2016.
 
ITEM 4.  CONTROLS AND PROCEDURES
 
During the quarter, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Company's management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, October 29, 2016.
 
There are inherent limitations in the effectiveness of any control system, including the potential for human error and the circumvention or overriding of the controls and procedures. Additionally, judgments in decision making can be faulty and breakdowns can occur because of simple errors or mistakes. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our control system can prevent or detect all errors or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity's operating environment or deterioration in the degree of compliance with policies and procedures. 

During the third quarter of fiscal 2016, the Company implemented an updated version of its pre-existing enterprise resource planning ("ERP") system associated with business and financial processes. This implementation resulted in changes to the Company's internal control over financial reporting. The Company has taken steps to implement appropriate internal control over financial reporting during this period of change and will continue to evaluate the design and operating effectiveness of internal control over financial reporting during subsequent periods.

Other than the aforementioned ERP system implementation, there were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
 
Dick's Sporting Goods, Inc. and its subsidiaries are involved in various proceedings that are incidental to the normal course of their businesses. As of the date of this Quarterly Report on Form 10-Q, the Company does not expect that any of such proceedings will have a material adverse effect on the Company's financial position or results of operations.


22

 
 

ITEM 1A.  RISK FACTORS

For a discussion of risk factors affecting the Company refer to Part I, Item 1A. "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended January 30, 2016, filed with the Securities and Exchange Commission on March 25, 2016. The discussion of risk factors sets forth the material risks that could affect the Company's financial condition and operations.

Reference is also made to Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements" of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.
 
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth repurchases of our common stock during the third quarter of 2016:
Period
 
Total Number of Shares Purchased (a)
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)
 
Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
July 31, 2016 to August 27, 2016
 
174,980

 
$
51.53

 
174,726

 
$
1,071,115,531

August 28, 2016 to October 1, 2016
 
4,154

 
$
59.03

 

 
$
1,071,115,531

October 2, 2016 to October 29, 2016
 
567

 
$
55.93

 

 
$
1,071,115,531

Total
 
179,701

 
$
51.72

 
174,726

 
 


(a) 
Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock during the period.
(b) 
Shares repurchased as part of the Company's previously announced five-year $1 billion share repurchase program, authorized by the Board of Directors on March 7, 2013. On March 16, 2016, the Company's Board of Directors authorized an additional five-year share repurchase program of up to $1 billion of the Company's common stock. The Company will continue to purchase under the 2013 program until it is exhausted or expired.
 
ITEM 6.  EXHIBITS

The Exhibits listed in the Index to Exhibits, which appears on page 25 and is incorporated herein by reference, are filed or furnished (as noted) as part of this Quarterly Report on Form 10-Q.

23

 
 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on November 21, 2016 on its behalf by the undersigned, thereunto duly authorized.

DICK'S SPORTING GOODS, INC.
 
 
 
 
 
 
 
 
 
 
By:
/s/ EDWARD W. STACK
 
 
 
 
 
Edward W. Stack
 
 
 
 
 
Chairman and Chief Executive Officer
 
 
 
 
 
 
 
 
By:
/s/ LEE J. BELITSKY
 
 
 
 
 
Lee J. Belitsky
 
 
 
 
 
Executive Vice President – Chief Financial Officer
 
 
 
(principal financial and accounting officer)
 
 

24

 
 

INDEX TO EXHIBITS
Exhibit Number
 
Description of Exhibit
 
Method of Filing
10.1
 
Separation Agreement and General Release between the Company and Teri L. List-Stoll
 
Filed herewith
 
 
 
 
 
10.2
 
Offer Letter between the Company and Holly R. Tyson, Chief Human Resources Officer
 
Filed herewith
 
 
 
 
 
10.3
 
Offer Letter between the Company and Lee J. Belitsky, Executive Vice President - Chief Financial Officer
 
Filed herewith
 
 
 
 
 
31.1
 
Certification of Edward W. Stack, Chairman and Chief Executive Officer, dated as of November 21, 2016 and made pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
Filed herewith
 
 
 
 
 
31.2
 
Certification of Lee J. Belitsky, Executive Vice President - Chief Financial Officer, dated as of November 21, 2016 and made pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
Filed herewith
 
 
 
 
 
32.1
 
Certification of Edward W. Stack, Chairman and Chief Executive Officer, dated as of November 21, 2016 and made pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
Furnished herewith
 
 
 
 
 
32.2
 
Certification of Lee J. Belitsky, Executive Vice President - Chief Financial Officer, dated as of November 21, 2016 and made pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
Furnished herewith
 
 
 
 
 
101.INS
 
XBRL Instance Document
 
Filed herewith
 
 
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document
 
Filed herewith
 
 
 
 
 
101.CAL
 
XBRL Taxonomy Calculation Linkbase Document
 
Filed herewith
 
 
 
 
 
101.DEF
 
XBRL Taxonomy Definition Linkbase Document
 
Filed herewith
 
 
 
 
 
101.LAB
 
XBRL Taxonomy Label Linkbase Document
 
Filed herewith
 
 
 
 
 
101.PRE
 
XBRL Taxonomy Presentation Linkbase Document
 
Filed herewith
 
 
 
 
 

25
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Section 2: EX-10.1 (EXHIBIT 10.1)

Exhibit



Exhibit 10.1

36809465_dksheaderlogo2016.jpg

SEPARATION AGREEMENT AND GENERAL RELEASE

DICK’S SPORTING GOODS, INC. (“Employer”) and TERI LIST-STOLL (“Employee”), enter into this Separation Agreement and General Release (this “Agreement”).

WHEREAS, Employee was employed by Employer as Executive Vice President - Chief Financial Officer;

WHEREAS, Employer terminated Employee’s employment effective September 1, 2016 (the “Termination Date”); and,

WHEREAS, Employer is willing to provide to Employee, subject to the terms of this Agreement certain severance in exchange for Employee providing a release of claims and other commitments.

NOW THEREFORE, and in consideration of the mutual promises contained herein, the receipt and adequacy of which are hereby acknowledged, Employer and Employee agree as follows:

1.Definitions.

a.Company” means: Employer and any entity that controls, is under common control with or is controlled by Employer, which includes without limitation Golf Galaxy, LLC.

b.Releasees” means: the Company; the present or former directors, members, officers, shareholders, employees, affiliates, agents and advisors (including attorneys) of each entity constituting the Company; and the current or former trustees or administrators of any pension or other benefit plan applicable to the employees or former employees of any of the entities constituting the Company.

2.Termination of Employment.

a.Employer timely paid or will timely pay Employee in accordance with its normal payroll and other procedures (or as otherwise required by law) for Employee’s work through the Termination Date, less all required tax withholdings and other deductions. Employee will receive this payment regardless of whether Employee signs or revokes this Agreement.

b.If Employee was enrolled in Employer’s medical benefit plans, Employee’s coverage under such plans shall cease as of September 30, 2016. As of the Termination Date, all of Employee’s other fringe benefits shall cease.

3.Effective Date. This Agreement shall not become effective in any respect until the Revocation Period as set forth in Section 22(f) has expired without notice of revocation. In the absence of Employee’s revocation of this Agreement, the eighth day after Employee’s execution of this Agreement shall be the “Effective Date” of this Agreement.

4.Existing Agreement. The parties previously entered into a Non-Compete and Confidentiality Agreement dated August 1, 2015 (the “Non-Compete Agreement”) relating to, among other things, confidentiality obligations and non-compete and non-solicitation restrictions applicable to Employee. The parties acknowledge and agree that from and after the Effective Date, the Non-Compete Agreement shall be superseded in its entirety by this Agreement.

5.Severance Payments, Bonus and Conditions.
  
a.In lieu of the severance otherwise set forth in the Non-Compete Agreement, which would total $57,692.32, Employer agrees to pay Employee severance in the aggregate amount of $767,000.00 (the “Severance”). The Severance shall be payable as follows:




(i)
$750,000 of the Severance shall be payable in 26 installments of $28,846.16 each. These Severance installments shall be paid every two weeks beginning on Employer’s first regular pay date after the Effective Date.

(ii)
$17,000.00 of the Severance shall be paid in a single lump sum payment on the first regular pay date after the Effective Date.

b.If Employer achieves its performance targets for company-wide metrics for Fiscal Year 2016 of at least the target level for payout for Fiscal Year 2016, Employer shall pay Employee a pro-rated portion of the target performance incentive bonus award for Employee’s salary grade under Employer’s Performance Incentive Plan for Fiscal Year 2016. Payment of the performance incentive bonus award will be based on Employer’s audited financial statements for Fiscal Year 2016 and is subject to Employer’s Board of Directors’ approval of such financial results. For clarification, Employee will be entitled to the pro-rata portion of such bonus (pro rata calculation based on the portion of the fiscal year completed as of the Termination Date) at the target level so long as the target threshold for Company performance was achieved; however Employee shall not be entitled to performance incentive bonus above the target level even if

c.company-wide metrics exceed the target level. Subject to the foregoing, such payment shall be made to Employee at a time determined by Employer in the ordinary course of business but no later than seventy (70) days after the last day of Fiscal Year 2016.

d.If Employee accepts or has accepted a position, engagement or other relationship with a third party pursuant to which Employee receives or will receive compensation, then Employee shall promptly disclose in writing to Employer such fact and the nature and extent of such compensation. Employer's obligation to pay or to continue paying the Severance hereunder shall cease upon the start of Employee in a position, engagement or other relationship with expected gross compensation during the first 12 months of at least $750,000.00, measured as base salary plus any guaranteed and/or sign-on cash bonus which is payable in the first year of employment.

e.If Employer's obligation to pay or to continue paying the Severance ceases pursuant to Section 5(c), any partially accrued and unpaid Severance shall be prorated based on the date Employer's obligation ceases and such prorated amount shall be paid to Employee on Employer's next regular pay date.

f.Employee received a discretionary bonus of $115,000 on or about April 2016 (the “Incentive Bonus”) which was issued with the condition that Employee would be required to repay Employer a pro rata amount of the Incentive Bonus if Employee’s employment terminated within two years of the payment of the Incentive Bonus. Subject to Employee’s execution of this Agreement and adherence to the promises made herein, Employer agrees to forgive Employee’s obligation to repay to Employer the Incentive Bonus.

g.Employer will pay Employee Employee’s unused vacation (73.22 hours as of the Termination Date) in the amount of $26,400 payable on the first regularly scheduled pay date after the Effective Date.

h.The severance payments and benefits shall be subject to any applicable federal, state or local income and employment tax withholding, reporting or other requirements. Employee acknowledges and understands that the amounts paid to Employee will be reported to the United States Internal Revenue Service and other appropriate taxing agencies in accordance with all federal, state and local tax reporting requirements. Employee further agrees that Employee shall be responsible for Employee’s tax liabilities associated with such payments and that Employee shall indemnify, defend and hold Company harmless with respect to any tax liability or penalty relating to the payments or the matters encompassed herein.

6.General Release and Waiver of Claims.

a.Employee irrevocably and unconditionally releases, acquits and forever discharges Releasees of and from any and all charges, complaints, claims, causes of action, suits and debts, of whatever nature, related in any way to Employee’s employment by any Releasee or termination thereof, occurring or accruing on or before the date Employee executes this Agreement, whether known or unknown, asserted or unasserted, that Employee now has, may have, or claims to have against Company or any of the other Releasees. This includes any and all such claims or causes of action that Employee could make on Employee’s own behalf, but also those that may or could be brought by any person or entity on Employee’s behalf.





b.The release and waiver set forth in Section 6(a) includes, but is not limited to, any claims arising under any federal, state or local statutes, regulations, ordinances or common laws, specifically including, but not limited to (and in each case as it may have been amended): the Age Discrimination in Employment Act (“ADEA”); the Older Workers’ Benefit Protection Act; the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Family and Medical Leave Act; Sections 1981 through 1988 of Title 42 of the United States Code; the Employee Retirement Income Security Act of 1974; the Americans with Disabilities Act of 1990; the Occupational Safety and Health Act; the Equal Pay Act of 1963; the Consolidated Omnibus Budget Reconciliation Act of 1985; the Health Insurance Portability and Accountability Act of 1996; Section 503 of the Rehabilitation Act of 1973; and any common law claims, including but not limited to those alleging wrongful discharge, intentional or negligent infliction of emotional distress, breach of contract, promissory or equitable estoppel, discrimination, defamation, invasion of privacy, negligence, breach of duty and/or claims for attorney’s fees, punitive, compensatory and liquidated damages, expenses or costs.

c.Notwithstanding Sections 6(a) and (b), the release set forth therein does not and is not intended to (i) release any claims that cannot be released by law, such as claims for workers compensation benefits, or (ii) preclude Employee from seeking a judicial determination of the validity of the release of Employee’s rights under the ADEA.

d.Notwithstanding Sections 6(a) and (b), nothing in this Agreement prohibits or prevents Employee from filing a charge with or participating, testifying, or assisting in any investigation, hearing, whistleblower proceeding or other proceeding before any federal, state, or local government agency (e.g. EEOC, NLRB, SEC., etc.), nor does anything in this Agreement preclude, prohibit, or otherwise limit, in any way, Employee’s rights and abilities to contact, communicate with, report matters to, or otherwise participate in any whistleblower program administered by any such agencies. However, to the maximum extent permitted by law, Employee agrees that if such a charge is filed or an administrative claim is made, Employee shall not be entitled to recover any individual monetary relief or other individual remedies; provided the foregoing does not prohibit Employee from seeking and obtaining a whistleblower award from the Securities and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934, as amended.

e.Notwithstanding Sections 6(a) and (b), the release, waiver and other provisions of this Agreement do not diminish or otherwise adversely impact any vested benefits to which Employee might be entitled pursuant to any employee benefit plan maintained by Employer.

7.Termination of Employment; No Re-Hire. As of the Termination Date, Employee’s employment relationship with Employer shall be permanently and irrevocably severed, and Employee forever waives any and all claims or right to reinstatement or future employment with the Company. Employee agrees that Employee shall not at any time seek or accept future employment with the Company in any capacity.

8.Return of Company Materials and Property. All documents and other property that relate to the business of the Company are the exclusive property of the Company, even if Employee authored or created them. Employee represents that Employee has returned to Employer any and all such documents and property, including, but not limited to, electronic and paper documents, software, equipment (including, but not limited to, mobile devices, computers and computer-related items), and all other materials or other things (including, but not limited to, identification and keys), as well as any copies, in whatever form.

9.Cooperation.

a.At the Company’s request, Employee shall be reasonably available to the Company and cooperate with the Company with respect to the investigation, defense or prosecution of matters that relate to any threatened, present or future claims or proceedings that involve the Company or the other Releasees and about which Employee reasonably may have knowledge. Employee acknowledges that providing such cooperation may include, without limitation, meeting with attorneys and other Company representatives to prepare for depositions or testimony and giving depositions and testimony. Employer shall pay Employee’s reasonable costs and expenses incurred in connection with Employee’s performance of Employee’s obligations under this Section 9 at the request of the Company.

b.Employee will promptly complete and return any director and officer questionnaire or provide similar information, and execute any certifications, as may be requested by Employer in connection with legal and regulatory requirements, including the requirements of the federal securities laws and the relevant national stock exchange, and Employer’s controls and procedures.





10.Confidentiality; Assignment of Inventions.

a.Except as expressly permitted by Employer in writing or required by law, Employee shall not at any time disclose to any person or entity or use for Employee’s own benefit or for the benefit of any person or entity other than the Company, any proprietary or confidential information disclosed to, obtained by or developed by Employee during Employee’s employment by the Company. For purposes of this Agreement, the term “proprietary or confidential information” shall include, but not be limited to, any and all information in whatever form, whether written, electronically stored, orally transmitted or memorized pertaining to: any trade secret; trademark, patent, copyright or other intellectual property right; confidential or non-public information (including, but not limited to, any materials or information the Company designates as being proprietary or confidential); knowledge or data, whether of a technical or commercial nature; sales or production records or data; long and short term goals; sales or production records or data; license arrangements and terms; confidential matters concerning private brand offerings; records; ledgers; business correspondence; memoranda and other records databases; programs; sales and marketing plans; research and development plans; product or service pricing and pricing policies; business development plans; Inventions (as defined in Section 10(c)); financial statements, plans, performance or other financial information; tax information; managerial and operational policies; ideas; plans; methods; practices and procedures; proprietary software; personnel information and files; vendor and supply arrangements, pricing and lists; marketing strategies; customer lists and records; and all other confidential or proprietary business information related to the conduct or strategy of the business of the Company.

b.Employee is aware of the restrictions imposed by federal and state securities laws on a person possessing material, non-public information. Employee further acknowledges that the disclosure of any material, non-public information to another person who would or does conduct trades in any securities while in possession of any material, non-public information is a violation of law, which could subject Employee and persons to whom the information was disclosed to civil and criminal penalties under the securities laws of the United States.

c.Any and all inventions, products, discoveries, improvements, processes, formulae, manufacturing methods or techniques, designs, devices, apparatuses, practices, content, creative works of authorship, computer programs or databases or styles, whether or not patentable or copyrightable (collectively referred to as “Inventions”) made, developed or created by Employee, alone or in conjunction with others, during regular hours of work or otherwise, during Employee’s term of employment by Employer, that may be directly or indirectly useful in or related to the business of, or tests being carried out by, the Company, are the exclusive property of the Company. Employee hereby assigns all Inventions to the Company and will, upon Employer’s request, whether before or after the Termination Date, execute all documents necessary or advisable in the opinion of Employer or its counsel to direct issuance of any type of intellectual property right to the Company with respect to Inventions that are the exclusive property of the Company under this Section 10(c) or to vest in the Company title to such Inventions. The expense of securing any such intellectual property right shall be borne by Employer. Employee will keep confidential and will hold for the Company’s sole benefit any Invention that is to be the Company’s exclusive property under this Section 10(c) for which no intellectual property right is issued.

d.If Employee is compelled by applicable law or governmental regulation or compulsory legal process to disclose “proprietary or confidential information,” as defined in Section 10(a), Employee must notify Employer in advance and in writing, as soon as Employee is aware that disclosure is or may be required or appropriate, of the nature of any such proposed disclosure and the persons or entities to which such disclosure is proposed to be made, so that Employer has the opportunity to take such action as it deems necessary to protect its “proprietary or confidential information” as defined in Section 10(a).

11.Confidentiality of Agreement.

a.Employee agrees that the existence, negotiation, terms and conditions of this Agreement are confidential. Except as expressly permitted by Employer in writing, and except for disclosures to Employee’s legal and financial advisors and members of Employee’s immediate family, each of whom shall first agree to the same confidentiality restrictions, Employee shall not disclose to any person or entity, this Agreement, the existence or nature hereof, or the terms or conditions set forth herein, or the circumstances surrounding Employee’s separation from Employer, and Employee shall take reasonable steps necessary or appropriate to cause the members of Employee’s family and Employee’s advisors to abide by such disclosure restriction.

b.Notwithstanding the foregoing, this Agreement does not prohibit Employee from (i) providing truthful testimony in response to compulsory legal process, (ii) participating or assisting in any investigation or inquiry by a governmental agency acting within the scope of its statutory or regulatory jurisdiction or (iii) making truthful statements in connection with any claim permitted to be brought by Employee under this Agreement.





12.Non-Disparagement. Employee shall not make any disparaging or negative comments, whether oral or written, about the Company or any other Releasees and shall take reasonable steps necessary or appropriate to cause the members of Employee’s family and Employee’s advisors to abide by such disclosure restriction. Company agrees that it shall instruct its Senior Executives not to make any disparaging or negative comments, whether oral or written, about Employee. For purposes of this provision, a “Senior Executive” shall mean any individual at the level of Senior Vice President or above employed by the Company as of the Effective Date of this Agreement. This provision does not prohibit Employee or Company from (i) providing truthful testimony in response to compulsory legal process, (ii) participating or assisting in any investigation or inquiry by a governmental agency acting within the scope of its statutory or regulatory jurisdiction or (iii) making truthful statements in connection with any claim brought by Company or permitted to be brought by Employee under this Agreement.

13.Covenants Regarding Competition and Employees.

a.For a period of eighteen (18) consecutive months following the Termination Date (the "Restrictive Period"), Employee specifically agrees that Employee shall not:
i.Directly or indirectly, own, manage, control, aid, assist, participate in, be a consultant to, render services for, accept a position with, be employed by, or otherwise be involved in any manner with the ownership, management, operation or control of any Sporting Goods Provider (as defined below) that conducts operations anywhere within the United States and/or in any other country in which the Company conducts retail operations or has plans to conduct retail operations within 18 months following the Termination Date (the "Restricted Area"); or,

ii.Induce, solicit or assist in any way in encouraging, directly or indirectly, any person who is a Company employee to terminate such employment relationship, otherwise assist in the recruitment of a Company employee to accept employment or an engagement with another entity or hire or otherwise retain the services of a Company employee. For purposes of this Section, a Company employee means any person who is a Company employee at any time during the period commencing 3 months prior to the Termination Date and ending on the last day of the Restrictive Period.

b.The term "Sporting Goods Provider" means any of the following:

i.Any entity listed on Appendix A, regardless of whether such entity falls within the other categories listed in this definition;

ii.Any entity that sells direct to consumers through 15 or more stores and has a total product mix of more than 50% Sporting Goods as measured either by product count or by sales; for purposes of this definition "Sporting Goods" includes each of the following: (A) hard or soft line sporting goods and equipment (including, without limitation, team sports goods and equipment, bicycles and exercise equipment); (B) sports or athletic footwear or apparel; (C) hunting, fishing, camping or outdoor apparel, gear, accessories, equipment or other products (including, without limitation, long guns/hunting rifles and ammunition); and (D) golf clubs, golf equipment, golf apparel, golf accessories or golf services;

iii.Any entity that sells direct to consumers through the Internet and/or catalogs, and has a total product mix of more than 50% Sporting Goods as measured either by product count or by sales;

iv.Any entity that employs or retains Employee to perform services materially related to Sporting Goods and has aggregate sales to consumers through any combination of stores, the Internet and/or catalogs in excess of $500 million per year;

v.Any entity (A) from or to which the Company licenses a brand for the purpose of manufacturing and/or distributing products or (B) that supplies products to the Company if the Company's sales of such entity's products are in excess of $20 million per fiscal year (as measured in the Company's most recently completed full fiscal year as of the Termination Date);

vi.Any brokerage firm or similar entity that, within the 1-year period prior to the Termination Date, has represented or otherwise provided real estate brokerage or similar services to the Company or, to employee's knowledge after due inquiry, to any entity covered by clause (i) or (ii) above; or





vii.With respect to each entity identified above in clauses (i) through (vi), (A) its successors and assigns (whether by sale, merger, consolidation, name change, or otherwise), (B) any entity that controls, is under common control with or is controlled by such entity and (C) any division, affiliate, subsidiary or franchisee of any such entity or of any entity covered by the immediately foregoing clauses (A) and (B); further, for purposes of any sales determinations or store counts required by this definition, the sales and stores of the entities covered by the immediately foregoing clauses (A), (B) and (C) shall be aggregated with those of the entities identified above in clauses (i) through (vi).

c.Employee acknowledges that the Restricted Area is reasonable because of the Company's business, its customers and the products that it sells, where it sells them and how it sells them, including without limitation that the Company's sales are not limited by state boundaries, the Company competes with entities offering products for sale via the Internet and catalog, and the Company conducts or intends to conduct retail operations throughout the United States and in the future expects to conduct retail operations in additional jurisdictions. If a court of competent jurisdiction determines that one or more of the provisions of this Section 13 is so broad as to be unenforceable, then such provision shall be deemed to be reduced in scope or length, as the case may be, to the extent required to make this Section 13 enforceable. If Employee violates the provisions of this Section 13 (as written or as so reduced in scope), the Restrictive Period shall be extended by that number of days that equals the aggregate number of days of Employee's violation of this Section 13.

d.Nothing herein shall prohibit Employee from being a passive owner of not more than 2% of the outstanding stock of any class of a corporation that is publicly traded.

14.Breach by Employee.

a.Both parties hereto recognize that the obligations of Employee under this Agreement are special, unique and of extraordinary character and if Employee hereafter fails to comply with the restrictions and obligations imposed upon Employee under this Agreement, the Company will not have an adequate remedy at law. It is agreed that under such circumstances, the Company, in addition to any other rights that it may have, shall be entitled to injunctive relief to enforce any such restrictions and obligations without the necessity of the Company to post a bond, and that in the event any actual proceedings are brought in equity to enforce any such restriction or obligation, Employee shall not raise as a defense that there is an adequate remedy at law. In the event that the Company obtains an injunction, order, decree or other relief, in law or in equity, Employee shall be responsible for reimbursing the Company all costs associated with obtaining the relief, including reasonable attorneys’ fees, and expenses and costs of suit. Nothing in this Agreement shall be construed to prohibit the Company from pursuing any other available remedies for any such failure or threatened failure, including without limitation recovery of damages from Employee.

b.Employee will provide Employer with such information as Employer may from time to time reasonably request to determine Employee’s compliance with this Agreement. Employee authorizes Employer or its agents to contact Employee’s future employers (excluding solely board of director positions) to determine Employee’s compliance with this Agreement or to communicate the contents of this Agreement to such employers. Employee releases the Company and the other Releasees from all liability for any damage arising from any such contacts or communications. The foregoing is in addition to, but not in lieu of, any and all rights the Company may have at law or in equity in the event of a breach of this Agreement by Employee.

c.If Employee breaches or threatens to breach any provision of this Agreement, all obligations of the Company hereunder, including without limitation the obligation to pay the Severance, shall cease immediately.

15.Non-Admission of Wrongdoing. The parties agree that neither this Agreement nor the furnishing of the consideration for the release described herein shall be deemed at any time as an admission by either party, or evidence of any liability or unlawful conduct of any kind.





16.Governing Law; Personal Jurisdiction; Venue. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to the principles of conflicts of law. Employee irrevocably submits to the personal and exclusive jurisdiction of the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania in any action or proceeding arising out of, or relating to, this Agreement or related to Employee’s employment with or termination from Employer (whether such action arises under contract, tort, equity or otherwise). Employee irrevocably waives any objection that Employee now or hereafter may have to the laying of venue or personal jurisdiction of any such action or proceeding brought in such courts. Jurisdiction and venue of all such causes of action shall be exclusively vested in the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas of Allegheny County, Pennsylvania. Employee irrevocably waives Employee’s right to object to or challenge the above selected forum on the basis of inconvenience or unfairness under 28 U.S.C. § 1404, 42 Pa. C.S. § 5322 or similar state or federal statutes.

17.Internal Revenue Code Section 409A Compliance.

a.For purposes of Section 409A of the Internal Revenue Code, each severance benefit payment shall be treated as a separate payment. Each payment under this Agreement is intended to be excepted from Section 409A to the maximum extent provided under Section 409A as follows: (i) each payment that is scheduled to be made on or before March 15th of the calendar year following the calendar year containing the Termination Date (or, if later, the 15th day of the third month following the end of the Company's first taxable year in which the right to the payment is no longer subject to a substantial risk of forfeiture) is intended to be excepted under the short-term deferral exception as specified in Treas. Reg. § 1.409A-1(b)(4); and (ii) each payment that is not otherwise excepted under the short-term deferral exception is intended to be excepted under the involuntary pay exception as specified in Treas. Reg. § 1.409A-1(b)(9)(iii). The Employee shall have no right to designate the date of any payment under this Agreement.

b.With respect to payments subject to Section 409A (and not excepted therefrom), if any, it is intended that each payment is paid on a permissible distribution event and at a specified time consistent with Section 409A. The Company reserves the right to accelerate and/or defer any payment to the extent permitted and consistent with Section 409A. Notwithstanding any provision of this Agreement to the contrary, to the extent that a payment hereunder is subject to Section 409A (and not excepted therefrom) and payable on account of a termination of employment, such payment shall be delayed for a period of six months after the date of termination (or, if earlier, the death of the Employee) if the Employee is a "specified employee" (as defined in Section 409A and determined in accordance with the procedures established by the Company). Any payment that would otherwise have been due or owing during such six-month period will be paid immediately following the end of the six-month period in the month following the month containing the six (6)-month anniversary of the date of termination.

c.The offer set forth in this Agreement shall expire 21 days after the Termination Date. If Employee does not execute and return this Agreement to Employer within such 21-day period, Employee’s submission of the signed Agreement to Employer following the expiration of the 21-day period for acceptance shall be of no force and effect.

18.Jury Trial Waiver. In consideration of this Agreement, and the consideration provided under it, Employee irrevocably and unconditionally agrees not to elect a trial by jury and knowingly, intelligently and voluntarily waives all rights Employee has or may have had, but for this Agreement, to trial by jury in any proceeding, dispute, controversy or claim arising from or related to this Agreement or related to Employee’s employment with or termination from the Employer (including any claim arising under any provision of state, federal, common or local law), and Employee agrees to try any such claims brought by him/her in a court or tribunal without use of a jury.

19.Severability. If any provision of this Agreement is conclusively determined by a final judgment not subject to appeal to be prohibited or unenforceable in any jurisdiction, such provision shall be ineffective to the extent of such prohibition or unenforceability without affecting, impairing or invalidating the remaining provisions hereof or the enforceability thereof in such jurisdiction or the validity or enforceability of any provision hereof in any other jurisdiction.

20.Binding Effect; Non-Assignability. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns. The rights and obligations of Employee under this Agreement are personal to Employee and may not be assigned, transferred or delegated by Employee to any other person or entity. This Agreement shall be assignable by Employer, whether by operation of law or otherwise.





21.Entire Agreement; Amendment. This Agreement sets forth the entire agreement between the parties hereto, and, unless otherwise specified, fully supersedes any prior agreements or understandings between the parties including, without limitation, the Non-Compete Agreement. This Agreement may not be modified, altered or changed except in writing and signed by both parties wherein specific reference is made to this Agreement.

22.Reasonable Opportunity to Review, Acceptance and Revocation, and Other Acknowledgments.

a.Employee acknowledges that Employee has carefully read and fully understands the provisions of this Agreement, that Employee has had a full and fair opportunity to consider the terms of this Agreement (including the release and waiver of claims set forth herein) for a reasonable period of time, and that Employee’s acceptance of the terms of this Agreement is both knowing and voluntary.

b.Employee acknowledges that, except for the wages to be paid to Employee regardless of whether Employee signs this Agreement, as described in Section 2, and the Severance to be paid under this Agreement, as defined in Section 5.a., Company does not owe Employee any other wages, compensation, or benefits of any kind or nature.

c.Employee represents and acknowledges that (i) Employer has provided Employee with all leave to which Employee was entitled and, to the best of Employee’s knowledge, Employee is not suffering from any work-related injuries; and (ii) the Severance described in this Agreement are things that Employee is not entitled to receive in the absence of this Agreement. Employee represents and acknowledges that in executing this Agreement, Employee does not rely and has not relied upon any representation or statement made by Company or by any of the other Releasees with regard to the subject matter, basis or effect of this Agreement or otherwise, except any representation or statement expressly set forth herein.

d.Employee is hereby advised to consult with a lawyer of Employee’s choosing, and Employee hereby acknowledges that Employee understands that right and has had an opportunity to consult with a lawyer of Employee’s choosing regarding Employee’s lawful remedies and rights as well as the meaning and significance of the terms of this Agreement.

e.Employee has been given twenty-one (21) days to consider the terms of this Agreement before signing this Agreement. If Employee executes this Agreement prior to the expiration of the 21-day period, Employee acknowledges that Employee does so solely because Employee already fully and carefully considered this Agreement before signing it. If the terms or form of this Agreement are revised or modified prior to the expiration of such 21-day period, such revision or modification shall not restart that 21-day period.

f.Employee may revoke this Agreement, including without limitation the release and waiver of claims under the Age Discrimination in Employment Act, by delivering a written revocation to Deborah Victorelli, Vice President of Human Resources, Dick’s Sporting Goods, Inc., 345 Court Street, Coraopolis, PA 15108, within seven (7) days after executing this Agreement (the “Revocation Period”).

PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

The parties, agreeing to be legally bound hereby, knowingly and voluntarily sign this Agreement.


TERI L. LIST-STOLL
 
DICK’S SPORTING GOODS, INC.

/s/ TERI L. LIST-STOLL
 
/s/ HOLLY R. TYSON
 
 
Holly R. Tyson
Chief Human Resources Officer
Date: August 31, 2016
 
Date: September 1, 2016





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Section 3: EX-10.2 (EXHIBIT 10.2)

Exhibit



Exhibit 10.2
36809465_dksheaderlogo2016.jpg
www.DicksSportingGoods.com
345 Court Street · Coraopolis, PA 15108
 
Main Phone: 724-273-3400

June 15, 2016

Holly Tyson
210 South Mooreland Road
Richmond, VA  23229

Dear Holly:

It is our great pleasure to inform you that you have been selected to be a member of the DICK’S Sporting Goods Team. At DICK’S we continually search for the finest candidates who share our passion for sports and our belief that sports make people better. Like the most successful athletes, our professionals are driven, skilled, passionate and committed, and we believe you are someone who exhibits these same valuable traits, day in and day out, both personally and professionally.

Enclosed is important information about our organization, your individual position, compensation and benefits. Please review the attached materials and contact me at 724-273-3220 with any questions. The major provisions of your offer are as follows:

Position: Your position is Chief Human Resources Officer. This position is based in our Store Support Center, and you will report to me. We look forward to having you begin employment on August 3, 2016.

Base Pay: Your bi-weekly rate of pay will be $17,307.69 annualized to $450,000. DICK’S Sporting Goods associates are paid every other Friday, one week in arrears (one week behind the most current workweek you’ve completed). The workweek starts on Sunday and runs through Saturday.

Sign-on Bonus: You will receive a one-time sign-on bonus of $150,000 to be paid with your first paycheck. All applicable federal, state and local taxes will be withheld from this payment.

Annual Incentive: For fiscal year 2016, your target incentive award is 50% of your eligible earnings. The award can range from 0% to 100%, based on company and individual performance. Your next opportunity for a prorated incentive award will be in the Spring of 2017 based on fiscal year 2016 results. You will be guaranteed a minimum incentive payment of $112,500 for fiscal year 2016, to be paid in the Spring of 2017. For fiscal year 2017, your target incentive award is 60% of your eligible earnings. The award can range from 0% to 120%, based on company and individual performance.

Sign-on Equity: You will receive a sign-on equity grant valued at $610,000 consisting of a stock option grant valued at $366,000 that will vest at 25% each year over a four year period, and a restricted stock grant valued at $244,000 that will cliff vest after three years.

Annual Equity: Your target equity award is $500,000. The award can range from $0 to $750,000 based on company and individual performance. Your next opportunity for an annual equity grant will be in the Spring of 2017.

Long-term Incentive Plan: You are eligible to participate in our existing DICK’S Sporting Goods long-term incentive plan (LTIP). Additional plan details will be provided during your orientation.

Relocation: You are eligible to participate in our relocation program. A copy of the relocation policy is enclosed.

Health & Welfare Benefits: As a full-time salaried associate, after 30 days of continuous full-time service, you are eligible to participate in the full range of benefits, including medical, prescription, vision, dental, life and disability insurances, as well as retirement plans. Additional information on the benefit plans can be found at www.benefityourliferesources.com.






Paid Time Off: Your vacation time will accrue on a bi-weekly basis up to a total of 160 hours on an annual basis (the equivalent of 20 eight-hour days) starting with your hire date. Three personal days are awarded at the beginning of each calendar year and are prorated over the course of the year for new hires. Based on your hire date, you will be awarded two personal days for use in 2016. In addition, the Store Support Center observes seven paid holidays each year.

Terms: This offer is contingent upon a satisfactory background check. You will receive a separate email with a link directing you to our screening process. DICK’S is an at-will employer, which means that either you or DICK’s are free to end the employment relationship at any time, with or without notice or cause. All compensation and benefit plans are governed by their respective plan documents.

In addition, the following documents are enclosed and need to be executed prior to your start date. Please review, sign and forward to my attention.
Non-Compete Agreement
Sign-on Bonus Agreement
Relocation Agreement

On your first day of employment, you will be required to provide documentation indicating that you are legally eligible for employment in the United States. A list of acceptable forms of identification is enclosed. If you decide to accept our offer, please bring the appropriate identification with you on your first day of employment.

We hope that you’ll accept our offer of employment by signing and returning this letter to me.

Once again, we’d like to congratulate you on your offer. Please let me know if I can be of any help to you between now and your first day of employment. We look forward to welcoming you to the DICK’s team and building a future of success together.

Sincerely,
/s/ EDWARD W. STACK
 
 
Edward W. Stack
 
 
Chairman & Chief Executive Officer
 
 


I accept the above offer of employment:
/s/ HOLLY R. TYSON
 
June 20, 2016
Signature
 
Date

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Section 4: EX-10.3 (EXHIBIT 10.3)

Exhibit



Exhibit 10.3
36809465_dksheaderlogo2016.jpg
www.DicksSportingGoods.com
345 Court Street · Coraopolis, PA 15108
 
Main Phone: 724-273-3400

September 27, 2016

Dear Lee:

Congratulations! I am delighted to offer you the position of Executive Vice President, Chief Financial Officer reporting to me. The major provisions of your offer are as follows:

Position: Your position is Executive Vice President, Chief Financial Officer with an effective date of September 27, 2016.

Base Pay: Your bi-weekly rate of pay will be $25,000.00, annualized to $650,000.

Annual Incentive: Your target incentive award remains at 75% of your eligible earnings. The award can range from 0% to 150% based on company and individual performance.

Annual Equity: Your target equity award remains $900,000. The award can range from $0 to $1,350,000 based on company and individual performance.

Health & Welfare Benefits and Paid Time Off: Your benefits and vacation time will remain the same.

Once again, we’d like to congratulate you on your promotion.

Sincerely,
/s/ ANDRÉ J. HAWAUX
 
 
André J. Hawaux
 
 
Executive Vice President, Chief Operating Officer
 
 


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Section 5: EX-31.1 (EXHIBIT 31.1)

Exhibit
Exhibit 31.1
CERTIFICATIONS
I, Edward W. Stack, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Dick's Sporting Goods, Inc. (the "registrant");
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ EDWARD W. STACK
Date: November 21, 2016
Edward W. Stack
 
Chairman and Chief Executive Officer
 



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Section 6: EX-31.2 (EXHIBIT 31.2)

Exhibit
Exhibit 31.2
CERTIFICATIONS
I, Lee J. Belitsky, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Dick's Sporting Goods, Inc. (the "registrant");
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ LEE J. BELITSKY
Date: November 21, 2016
Lee J. Belitsky
 
Executive Vice President – Chief Financial Officer
 


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Section 7: EX-32.1 (EXHIBIT 32.1)

Exhibit


Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Dick's Sporting Goods, Inc. (the "Company") for the period ended October 29, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward W. Stack, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ EDWARD W. STACK
Date: November 21, 2016
Edward W. Stack
 
Chairman and Chief Executive Officer
 



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Section 8: EX-32.2 (EXHIBIT 32.2)

Exhibit


Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Dick's Sporting Goods, Inc. (the "Company") for the period ended October 29, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Lee J. Belitsky, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ LEE J. BELITSKY
Date: November 21, 2016
Lee J. Belitsky
 
Executive Vice President – Chief Financial Officer
 


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