DICK'S SPORTING GOODS, INC. - Annual Report: 2024 (Form 10-K)

New stores1 10 11 4 9 13

Acquired stores (3)

— 12 12 — — — Closed stores5 16 21 6 15 21 Ending stores 724

(4)

131 855 728 125 853 Other Data:Comparable store sales increase (decrease)2.4 %(0.5)%

Number of stores at end of period (5)

855853

Total square feet at end of period (in millions) (5)

42.742.6

Interest expense

Other income()()()

INCOME BEFORE INCOME TAXES

Provision for income taxes

NET INCOME

$ $ $

EARNINGS PER COMMON SHARE:

Basic

$ $ $

Diluted

$ $ $

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

Diluted

See accompanying notes to consolidated financial statements.


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DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

NET INCOME

OTHER COMPREHENSIVE LOSS:

Other long-term liabilities

Total long-term liabilities

COMMITMENTS AND CONTINGENCIES

per share; shares authorized

Common stock, par value $ per share; shares authorized; issued and outstanding at February 3, 2024; issued and outstanding at January 28, 2023

Class B common stock, par value $ per share; shares authorized; issued and outstanding at February 3, 2024 and January 28, 2023, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

()

Treasury stock, at cost; and shares at February 3, 2024 and January 28, 2023, respectively

()

Total stockholders' equity

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

See accompanying notes to consolidated financial statements.


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DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(in thousands, except per share data)

Class B
Common Stock

Common Stock

Additional
Paid-In
Capital

Retained
Earnings

Accumulated Other Comprehensive Loss

Treasury
Stock

Total

Amount

BALANCE, January 30, 2021

()

Exchange of Class B common stock for common stock

()

—

Exercise of stock options

—

Restricted stock vested

—

()

—

Minimum tax withholding requirements

()

—

()

—

()

Net income

—

Stock-based compensation

—

Foreign currency translation adjustment, net of taxes of $

—

()

—

()

Purchase of shares for treasury

()

—

()

Cash dividends declared, $ per common share

—

()

—

()

BALANCE, January 29, 2022

()

Adjustment for cumulative effect from change in accounting principle (ASU 2020-06)

—

()

—

()

Exchange of convertible senior notes due 2025 and partial unwind of convertible bond hedge and warrants

—

Exchange of Class B common stock for common stock

()

—

Exercise of stock options

—

Restricted stock vested

—

()

—

Minimum tax withholding requirements

()

—

()

—

()

Net income

—

Stock-based compensation

—

Foreign currency translation adjustment, net of taxes of $

—

()

—

()

Purchase of shares for treasury

()

—

()

Cash dividends declared, $ per common share

—

()

—

()

BALANCE, January 28, 2023

()

Retirement of convertible senior notes due 2025 and termination of convertible bond hedge and warrants

—

Exercise of stock options

—

Restricted stock vested

—

()

—

Minimum tax withholding requirements

()

—

()

—

()

Net income

—

Stock-based compensation

—

Foreign currency translation adjustment, net of taxes of $

—

()

—

()

Purchase of shares for treasury, including excise tax

()

—

()

Cash dividends declared, $ per common share

—

()

—

()

BALANCE, February 3, 2024

()

See accompanying notes to consolidated financial statements.


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DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Fiscal Year Ended

February 3,
2024

January 28,
2023

January 29,
2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

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

Depreciation and amortization

Amortization of deferred financing fees and debt discount

Deferred income taxes

Stock-based compensation

Other, net

Changes in assets and liabilities:

Accounts receivable

()

Inventories

()

Prepaid expenses and other assets

()

Accounts payable

Accrued expenses

()

Income taxes payable / receivable

()

Construction allowances provided by landlords

Deferred revenue and other liabilities

Operating lease assets and liabilities

()

Net cash provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

()

Proceeds from sale of other assets

Other investing activities

()

Net cash used in investing activities

()

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal paid in connection with exchange of convertible senior notes

()

—

Transaction costs for debt issuance

()

Proceeds from senior notes due 2032 and 2052, net of debt discount

Payments on finance lease obligations

()

Proceeds from exercise of stock options

Minimum tax withholding requirements

()

Cash paid for treasury stock

()

Cash dividends paid to stockholders

()

Increase (decrease) in bank overdraft

()

Net cash used in financing activities

()

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

()

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

()

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS, END OF PERIOD

Supplemental disclosure of cash flow information:

Accrued property and equipment

Cash paid during the fiscal year for interest

Cash paid during the fiscal year for income taxes

Accrued treasury stock

See accompanying notes to consolidated financial statements.


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DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Summary of Significant Accounting Policies

DICK’S Sporting Goods locations across the United States, serving and inspiring athletes and outdoor enthusiasts to achieve their personal best through a blend of dedicated teammates, in-store experiences and unique specialty shop-in-shops. In addition to DICK’S Sporting Goods stores, the Company owns and operates Golf Galaxy, Public Lands, Moosejaw and Going Going Gone! specialty concept stores, and offers its products both online and through mobile apps. The Company also owns and operates DICK’S House of Sport and Golf Galaxy Performance Center, as well as GameChanger, a youth sports mobile app for scheduling, communications, live scorekeeping and video streaming. When used in this Annual Report on Form 10-K, unless the context otherwise requires or specifies, any reference to “year” is to the Company’s fiscal year. million, $ million and $ million for fiscal 2023, 2022 and 2021, respectively. $ Money market funds Commercial paper Total cash and cash equivalents$ $

(1)Cash includes amounts due from third-party financial institutions for the settlement of credit card and debit card transactions, which typically process within business days.

Cash Management

The Company’s cash management system provides for the reimbursement of all major bank disbursement accounts on a daily basis. Accounts payable at February 3, 2024 and January 28, 2023 include $ million and $ million, respectively, of checks drawn in excess of cash balances not yet presented for payment.


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

million and $ million, respectively. The Company’s allowance for credit losses totaled $ million and $ million at February 3, 2024 and January 28, 2023, respectively.

million and $ million at February 3, 2024 and January 28, 2023, respectively. years

Leasehold improvements

- years

Furniture, fixtures and equipment

- years

Computer software

- years

million, $ million and $ million in fiscal 2023, 2022 and 2021, respectively.


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


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

million and $ million of gift card breakage revenue, respectively, and experienced approximately $ million and $ million of gift card redemptions in fiscal 2023 and fiscal 2022, respectively, that had been included in its gift card liability as of January 28, 2023 and January 29, 2022, respectively. Based on the Company’s historical experience, the majority of gift card revenue is recognized within months of deferral. The cards have no expiration date.

Loyalty program points are accrued at the estimated retail value per point, net of estimated breakage. The Company estimates the breakage of loyalty points based on historical redemption rates experienced within the loyalty program. Based on the Company’s customer loyalty program policies, the majority of program points earned are redeemed or expire within months. Refer to Note 6 – Deferred Revenue and Other Liabilities for additional information regarding the amount of these liabilities at February 3, 2024 and January 28, 2023.

Net sales by category

$ $

Apparel

Footwear (2)

Other (3)

Total net sales$ $ $

(1)Includes items such as sporting goods equipment, fitness equipment, golf equipment and fishing gear.

(2)Includes athletic shoes for running, walking, tennis, fitness and cross training, basketball and hiking. In addition, this category also includes specialty footwear, including casual footwear and a complete line of cleats for team sports.

(3)Includes the Company’s non-merchandise sales categories, including in-store services, shipping and GameChanger revenues.


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

million, $ million and $ million for fiscal 2023, 2022 and 2021, respectively.

reportable segment. Refer to Revenue Recognition within this Note for additional disclosure of net sales by merchandise category.


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

$ $ Net deferred tax assets$ $ $ Additional paid-in capital$ $()$ Retained earnings$ $ $

Following the adoption of ASU 2020-06, the embedded conversion feature of the Convertible Senior Notes is no longer separately presented within stockholders’ equity, eliminating the non-cash debt discount. Accordingly, the Company’s effective interest rate on the Convertible Senior Notes decreased from % to % upon adoption, resulting in a $ million reduction in pre-tax non-cash interest expense for fiscal 2022 as compared to fiscal 2021.

Despite the Company’s exchange of $ million of principal in cash during fiscal 2022, the application of the if-converted method requires earnings per diluted share to reflect that the Convertible Senior Notes will be settled entirely in shares upon conversion. Prior to the adoption of ASU 2020-06, the Company used the treasury stock method which allowed the Company to assume that the principal amount of the Convertible Senior Notes would be paid in cash. The impact of adoption was not material to earnings per diluted share.


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

million and $ million as of February 3, 2024 and January 28, 2023, respectively.

Recently Issued Accounting Pronouncements

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that adoption of this accounting standard will have on its financial disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendments in this ASU are intended to enhance the transparency and decision usefulness of income tax disclosures and are effective for annual periods beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis, although retrospective application is permitted. The Company is currently evaluating the impact that adoption of this accounting standard will have on its financial disclosures.


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

$ $ Effect of dilutive securitiesInterest expense associated with Convertible Senior Notes, net of tax

Net income for earnings per common share – diluted

$ $ $ Denominator:

Weighted average common shares outstanding – basic

Dilutive effect of stock-based awards Dilutive effect of warrants Dilutive effect of Convertible Senior Notes

Weighted average common shares outstanding – diluted

Earnings per common share:Basic$ $ $ Diluted$ $ $ Stock-based awards excluded from diluted shares

The dilutive effect of the Convertible Senior Notes included shares that were designed to be offset at settlement by shares delivered from the bond hedge purchased by the Company. The shares provided by the bond hedge were anti-dilutive; accordingly, they were not treated as a reduction to diluted weighted average shares outstanding until received at settlement. In addition, the dilutive effect of the Convertible Senior Notes included shares related to the outstanding principal amount of the Convertible Senior Notes. Although the Company was required to assume that the Convertible Senior Notes would be settled in shares of its common stock in accordance with the “if-converted method” under U.S. GAAP, the Company settled the Convertible Senior Notes without dilutive effect, due to cash payments for principal, shares received from the convertible bond hedge and share repurchases to offset the share settlement of the remaining $ million of principal during fiscal 2023. Refer to Note 10 – Convertible Senior Notes for further information.


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

Leasehold improvements

Furniture, fixtures and equipment

Computer software

Total property and equipment

Less: accumulated depreciation and amortization

()()

Net property and equipment

$ $

million and $ million for fiscal 2023 and 2022, respectively, and fiscal 2023 includes $ million of property and equipment for which deposits were previously recorded in other assets on the Consolidated Balance Sheets.

million, which is recorded net of $ million and $ million in accumulated impairments, respectively. In fiscal 2023, the Company recorded $ million of impairment charges in connection with the Business Optimization, which is further described in Note 11 - Fair Value Measurements. impairment charges were recorded in fiscal 2022 or 2021.

Intangible Assets

$— $ $—

Trade names (indefinite-lived)

— —

Other indefinite-lived intangible assets

— — Total indefinite-lived intangible assets — —

Customer lists

() ()

Total intangible assets

$ $()$ $()

million impairment of an indefinite-lived trademark that was no longer in use within selling, general and administrative expenses on the Consolidated Statement of Income million, $ million and $ million in fiscal 2023, 2022 and 2021, respectively. million of amortization expense on existing finite-lived intangible assets during fiscal 2024.


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

$ Real estate taxes, utilities and other occupancy costs Property and equipment Sales tax Other Total accrued expenses$ $

Customer loyalty program

Other

Total current deferred revenue and other liabilities

$ $

Long-term:

Deferred compensation$ $

$ $ Non-cash operating lease assets obtained in exchange for operating lease liabilities $ $ $


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

years yearsWeighted average discount rate for operating leases % %

2025 2026 2027 2028 Thereafter Total future undiscounted lease payments Less: imputed interest() Total reported lease liability$

The Company has entered into operating leases related to future store locations that have not yet commenced. As of February 3, 2024 the future minimum payments on these leases approximated $ million.

The Company acts as sublessor on several operating leases. As of February 3, 2024, total future undiscounted minimum rentals under non-cancellable subleases approximated $ million.

billion in unsecured revolving credit capacity (the “Credit Facility”), of which up to $ million is available for letters of credit. The Credit Facility matures on January 14, 2027, subject to extensions permitted under the Credit Agreement, and allows for $ million in additional incremental borrowing capacity, subject to existing or new lenders agreeing to provide such additional revolving commitments.

The loans under the Credit Facility bear interest at an alternate base rate or an adjusted secured overnight financing rate (“SOFR”) plus, in each case, an applicable margin of % with respect to the alternate base rate and % with respect to the adjusted SOFR as of February 3, 2024, which is subject to adjustment based on the Company’s public debt rating. The Credit Facility allows voluntary repayment of outstanding loans at any time without premium or penalty, other than customary breakage costs with respect to SOFR loans. The unused portion of the Credit Facility is subject to a commitment fee of % per year as of February 3, 2024, which is adjusted based on the Company’s public debt rating. There were borrowings outstanding under the Company’s revolving line of credit agreements at February 3, 2024 or January 28, 2023. After adjusting for outstanding letters of credit of $ million, the Company’s total remaining borrowing capacity under the Credit Facility was $ billion at February 3, 2024.

The Credit Agreement contains representations and warranties, affirmative and negative covenants and events of default customary for unsecured financings of this type, including negative covenants that, among other things, limit the ability of the Company and certain of its subsidiaries to incur liens, limit the ability of the Company to make certain fundamental changes and limit the ability of the Company’s non-guarantor subsidiaries to incur indebtedness, in each case subject to a number of important exceptions and qualifications. The Credit Agreement also contains a maximum lease-adjusted leverage ratio covenant. The Company was in compliance with all covenants of the Credit Agreement at February 3, 2024.


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

million aggregate principal amount of % senior notes due 2032 (the “2032 Notes”) and $ million aggregate principal amount of % senior notes due 2052 (the “2052 Notes” and, together with the 2032 Notes, the “Senior Notes”). The Senior Notes were issued under a base indenture, dated as of January 14, 2022 (the “Base Indenture”), as supplemented by a supplemental indenture, dated as of January 14, 2022 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), in each case by and between the Company and U.S. Bank National Association, as trustee. The Notes are unsecured, unsubordinated obligations of the Company and rank equally in right of payment to all of the Company’s existing and future unsecured and unsubordinated debt and other obligations. The Company is required to pay interest on the Senior Notes semi-annually, in arrears, on January 15 and July 15 of each year, commencing on July 15, 2022.

Net Proceeds and Carrying Values

Net proceeds from the issuance of the Senior Notes totaled approximately $ billion, after deducting the applicable discount. The Company also incurred approximately $ million in offering expenses, including underwriting fees, related to the issuance of the Senior Notes. Together, the discount, underwriting fees and offering expenses will be amortized over the respective terms of the Senior Notes using the effective interest method. The Company recognized interest expense related to the Senior Notes of $ million in each of fiscal 2023 and 2022 and $ million in fiscal 2021, using an effective interest rate of % on the 2032 Notes and % on the 2052 Notes.

$ $ $ $ $ Discounts and issuance costs()()()()()()Carrying amount$ $ $ $ $ $

Redemption

The Company may redeem the Senior Notes, at its option, in whole or in part, at any time and from time-to-time prior to (i) in the case of the 2032 Notes, October 15, 2031 (the date that is three months before the maturity date of the 2032 Notes), and (ii) in the case of the 2052 Notes, July 15, 2051 (the date that is six months before the maturity date of the 2052 Notes) (the applicable date with respect to each such series of Senior Notes, the “Applicable Par Call Date”), in each case, at a “make-whole” price described in the Supplemental Indenture plus accrued and unpaid interest to, but excluding, the redemption date. In addition, on or after the Applicable Par Call Date, the Company may redeem either series of the Senior Notes, at its option, in whole or in part, at any time and from time-to-time, at a redemption price equal to % of the principal amount of the Senior Notes of such series to be redeemed plus accrued and unpaid interest thereon to, but excluding, the redemption date.

Change in Control

In the event of certain change of control triggering events with respect to the Senior Notes of either series (subject to certain exceptions), the Company will be required to make an offer to each holder of the applicable Notes of such series to repurchase all or part of its Senior Notes of such series at a purchase price in cash equal to % of the principal amount of such Senior Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.

Covenants

The Indenture contains certain covenants that, among other things, restrict the Company’s and certain of its subsidiaries’ ability to incur certain indebtedness secured by liens on certain assets and limit the ability of the Company to make certain fundamental changes, in each case subject to a number of exceptions and qualifications described in the Indenture. The Indenture also provides for customary events of default which, if any of them occur, would permit or require the principal of and accrued interest on the Senior Notes to become or to be declared due and payable, as applicable. The Company was in compliance with its covenants at February 3, 2024.


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

10.

million of % Convertible Senior Notes due 2025, including the exercise of the full $ million over-allotment option, receiving proceeds of $ million, net of $ million of transaction fees and other third-party offering expenses. The Convertible Senior Notes accrued interest at a rate of % per annum, payable semi-annually in arrears on April 15 and October 15 and was subject to early conversion terms, under which the Company could settle the Convertible Senior Notes for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option.

In connection with the issuance of the Convertible Senior Notes, the Company purchased a bond hedge to offset the potential dilution to stockholders from the conversion of the Convertible Senior Notes, partially offsetting its cost by selling warrants to acquire shares of the Company’s common stock. These transactions effectively increased the conversion price associated with the Convertible Senior Notes.

Fiscal 2022 Convertible Senior Notes Exchanges and Fiscal 2023 Retirement

During fiscal 2022 and fiscal 2023, the Company entered into multiple agreements with certain holders of the Convertible Senior Notes to exchange, and ultimately retire in the first quarter of fiscal 2023, all of its Convertible Senior Notes and all accrued and unpaid interest for a combination of cash and shares of the Company’s common stock. Concurrently with each of the exchange transactions, the Company entered into agreements with certain counterparties to terminate a proportionate amount of the bond hedge and warrant agreements (collectively, the “Notes Exchanges”).

In connection with the fiscal 2022 Notes Exchanges, the Company recognized pre-tax non-cash inducement charges of $ million, which were recorded within interest expense on the Consolidated Statement of Income, paid a total of $ million to noteholders to redeem the principal amount of the Convertible Senior Notes with a carrying value of $ million, and issued million shares of the Company's common stock to terminate the proportionate amount of the bond hedge and warrants.

The retirement of the remaining $ million of Convertible Senior Notes in the first quarter of fiscal 2023 was substantially settled by shares of the Company’s common stock, and together with the termination of the bond hedge and warrants, the Company issued million shares of its common stock and recorded $ million to additional paid-in-capital.

As of the end of fiscal 2023, the Company no longer has outstanding Convertible Senior Notes, bond hedges or warrants.

Financial Statement Impacts

Debt discount and issuance fees()Carrying amount$

During fiscal 2023 and 2022, the Company recognized interest expense related to the Convertible Senior Notes of $ million and $ million, respectively, or $ million and $ million, net of tax, which included the aforementioned inducement charges. Prior to the adoption of ASU 2020-06, the Company recognized $ million of interest expense related to the Convertible Senior Notes in fiscal 2021, of which $ million was attributed to non-cash amortization of the debt discount and issuance fees. Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies for further information.


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

11.

million and $ million, respectively. $ $ $ 2052 Notes$ $ $ $

Convertible Senior Notes (1)

$ $ $ $

(1) The Company’s Convertible Senior Notes were fully retired on April 18, 2023.

Due to their short-term nature, the fair values of cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximated their carrying values at both February 3, 2024 and January 28, 2023.

Nonrecurring

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis may include property and equipment, operating lease assets, goodwill and other intangible assets, equity and other assets. These assets are required to be assessed for impairment when events or circumstances indicate that the carrying value may not be recoverable, and at least annually for goodwill and indefinite-lived intangible assets. If an impairment is required, the asset is adjusted to fair value using Level 3 inputs.

During fiscal 2023, the Company completed a business optimization to better align its talent, organizational design and spending in support of its most critical strategies while also streamlining its overall cost structure (the “Business Optimization”). As part of the Business Optimization, the Company eliminated certain positions primarily at its CSC and optimized its outdoor business, which included the integration of its Moosejaw and Public Lands operations, decisions about their go-forward inventory assortment and a comprehensive review of their store portfolios and closure of Moosejaw stores. The Company incurred pre-tax charges of $ million from its Business Optimization, including $ million of non-cash impairments of store and intangible assets and a $ million write-down of inventory. Additionally, the Company incurred $ million of severance-related costs, of which $ million remains to be paid over the next 12 months. The $ million write-down of inventory is reflected within cost of goods sold, while the remaining $ million of severance-related costs and non-cash impairments are reflected within selling, general and administrative expenses on the Consolidated Statement of Income. Depreciation and amortization on the Consolidated Statement of Cash Flows includes $ million of non-cash impairment of store assets from these actions.


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

Field & Stream stores to DICK’S House of Sport stores, expanded DICK’S Sporting Goods stores, or other specialty concept stores. The Company closed of these stores for conversion during the fourth quarter of 2022 and incurred pre-tax charges totaling $ million, which included $ million of non-cash impairment of store assets, $ million of severance and a $ million write-down of inventory. The $ million non-cash impairment of store assets is reflected within selling, general and administrative expenses on the Consolidated Statement of Net Income and within depreciation and amortization on the Consolidated Statement of Cash Flows.

12.

shares of common stock, par value $ per share, and the issuance of shares of Class B common stock, par value $ per share. In addition, the Company’s Amended and Restated Certificate of Incorporation authorizes the issuance of up to shares of preferred stock.

Holders of common stock generally have rights identical to holders of Class B common stock, except that holders of common stock are entitled to vote per share and holders of Class B common stock are entitled to votes per share. A related party, relatives of the related party and their trusts hold all outstanding Class B common stock, which can only be held by members of this group. Class B common shares are not publicly tradable. Each share of Class B common stock can be converted at any time into share of common stock at the holder’s option.

Dividends per Common Share

The Company declared aggregate cash dividends of $, $ and $ per share of common stock and Class B common stock during fiscal 2023, 2022 and 2021, respectively, which resulted in cash payments for dividends of $ million, $ million and $ million, respectively. Fiscal 2021 included a special dividend of $ per share on the Company’s common stock and Class B common stock declared in August 2021.

Treasury Stock

As of January 30, 2021, the Company had approximately $ billion collectively remaining under $ billion share repurchase programs originally authorized by its Board of Directors on March 16, 2016 and June 12, 2019, respectively, both of which were fully exhausted during fiscal 2021. On December 16, 2021, the Company’s Board of Directors authorized an additional share repurchase program of up to $ billion of its common stock, which the Company may suspend or discontinue at any time.

Treasury stock acquired during the fiscal year, including excise tax$ $ $

(1) Fiscal 2021 included $ million of cash settlements for million shares of treasury stock that were paid in the first week of fiscal 2022.

As of February 3, 2024, the Company had $ million remaining under the December 2021 authorization.


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

13.

$ $

State

Total current provision

Deferred:

Federal

State

() Total deferred provision

Total provision

$ $ $

% % %

State tax, net of federal benefit

% % %Excess tax benefit related to stock-based compensation()%()%()%Eliminated bond hedge deduction following Convertible Senior Notes exchanges % % %

Other permanent items

%()% %

Effective income tax rate

% % %


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

Inventory

Employee benefits and withholdings

Stock-based compensation

Gift cards

Deferred revenue currently taxable

Other accrued expenses not currently deductible for tax purposes

Net operating loss carryforward

Non income-based tax reserves Uncertain income tax positions

Insurance

Convertible Senior Notes

Other

Total deferred tax assets

Operating lease assets()()

Property and equipment

()()

Inventory valuation

()()

Intangibles

()()

Prepaid expenses

()()

Total deferred tax liabilities

()()

Net deferred tax asset

$ $

The deferred tax asset from net operating loss carryforwards of $ million represents state net operating losses, which expire in 2034. The net deferred tax asset balances at February 3, 2024 and January 28, 2023 were included within long-term assets on the Consolidated Balance Sheets.

Under the Tax Cuts and Jobs Act of 2017, a one-time transition tax resulted in the elimination of the excess of the amount of financial reporting basis over the tax basis in the foreign subsidiaries and subjected $ million of undistributed foreign earnings to tax. No additional income taxes have been provided for any remaining undistributed foreign earnings or foreign withholdings and US state taxes not subject to the one-time transition tax, as the Company intends to permanently reinvest the earnings from foreign subsidiaries outside the United States.

Unrecognized Tax Benefits

$ $

Increases as a result of tax positions taken in a prior period

Decreases as a result of tax positions taken in a prior period

Increases as a result of settlements during the current period

Decreases as a result of settlements during the current period

()()()

Reductions as a result of a lapse of statute of limitations during the current period

End of fiscal year

$ $ $


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

million of unrecognized tax benefits that would impact our effective tax rate if recognized. The Company recognizes accrued interest and penalties from unrecognized tax benefits in income tax expense.

As of February 3, 2024 the Company’s total liability for uncertain tax positions, including $ million for interest and penalties, was approximately $ million. The Company recorded $ million, $ million and $ million during fiscal 2023, 2022 and 2021, respectively, for the accrual of interest and penalties in the Consolidated Statements of Income. The Company does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Consolidated Statements of Income during fiscal 2024.

Audits

The Company participates in the Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”). As part of CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. For tax years 2023 and 2022, the Company was accepted to the CAP Compliance Maintenance phase during which the IRS evaluates the necessary level of review based on complexity and other factors. The IRS has completed its examination for tax year 2022. For tax years 2021 and 2020, the Company was accepted into the CAP Bridge phase during which it is not the intent of the IRS to examine the tax return. Acceptance into the Bridge phase is based on a taxpayer’s low risk of noncompliance and having few, if any, material issues. The IRS has completed examinations of 2019 and all prior tax years. The Company is no longer subject to examination in any of its major state jurisdictions for years prior to 2019.

Recent Tax Legislation

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 that included, among other provisions, changes to the U.S. corporate income tax system, including implementing a 15% minimum tax on adjusted financial statement income for certain large corporations, a 1% excise tax on net stock repurchases after December 31, 2022 and tax incentives to promote alternative sources of energy. The Company determined the Inflation Reduction Act did not have a material impact on our financial results, including on our annual estimated effective tax rate or on our liquidity.

The Organization for Economic Cooperation and Development introduced a framework to implement a global 15% minimum corporate tax (“Pillar Two”). The European Union issued a directive to its member states to enact the Pillar Two in their local laws effective after December 2023. A number of other countries are expected to implement similar legislation with effective dates in the future. The Company is continuing to evaluate and does not currently anticipate that Pillar Two legislation will have a material impact on the Company’s financial condition, results of operations, cash flows or disclosures.

14.

shares of common stock were available for future issuance at the end of fiscal 2023. $ $ Performance-based restricted stock expense

Stock option expense

Total stock-based compensation expense$ $ $ Total related tax benefit$ $ $

Restricted Stock

The Company issues shares of restricted stock to eligible employees, which are subject to forfeiture until the end of the applicable vesting period. Restricted stock awards generally vest on the third anniversary of the date of grant, subject to the employee’s continuing employment as of that date. The fair value of restricted stock is determined on the date of grant using the Company’s stock price.


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

$ $ Granted Vested() Forfeited() Nonvested, February 3, 2024 $ $

As of February 3, 2024, total unrecognized compensation expense, net of estimated forfeitures, from nonvested shares of restricted stock was approximately $ million, which the Company expects to recognize over a weighted average period of approximately years.

Performance-based Restricted Stock

The Company issues performance-based restricted stock to eligible employees in support of the Company’s strategic initiatives. Performance-based restricted stock, including shares and units, generally vest on the third anniversary of the date of grant and are subject to the employees’ continued employment as of that date. Additionally, the number of awards vesting depends upon the achievement of certain performance criteria for the fiscal year in which they are granted, which can result in a payout range of % to % of the original award amount. The fair value of performance-based restricted stock is based on the Company’s stock price on the date of grant. Awards issued during fiscal 2023 assumed target, or %, attainment of the shares or units, which approximates the projected attainment for awards at vest date as of February 3, 2024.

$ $ Granted Vested() Forfeited()

Nonvested, February 3, 2024

$ $ % %

The risk-free interest rate is determined by using the U.S. Treasury constant maturity interest rate with a term consistent with the expected life of the option, which represents the estimated period of time until exercise and is based on historical experience of similar awards giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. The expected dividend yield and volatility are based on historical stock prices and dividend amounts over preceding periods equal in length to the expected life of the options. The Company applies an estimated forfeiture rate that is calculated based on historical activity. The assumptions used to calculate an option’s fair value are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience.

$ $ Exercised() Forfeited / Expired() Outstanding, February 3, 2024 $ $ Exercisable, February 3, 2024 $ $ Vested or expected to vest, February 3, 2024 $ $

/s/ LAWRENCE J. SCHORR

Lawrence J. Schorr

DirectorMarch 28, 2024

/s/ LARRY D. STONE

Larry D. Stone

DirectorMarch 28, 2024


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of DICK’S Sporting Goods, Inc.

Opinion on the Financial Statement Schedule

We have audited the consolidated financial statements of DICK’S Sporting Goods, Inc. and subsidiaries (the “Company”) as of February 3, 2024 and January 28, 2023, and for each of the three years in the period ended February 3, 2024, and the Company’s internal control over financial reporting as of February 3, 2024, and have issued our reports thereon dated March 28, 2024; such consolidated financial statements and reports are included in this Annual Report on Form 10-K. Our audits also included the financial statement schedule of the Company listed in the Index at Item 15. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statement schedule based on our audits. In our opinion, such financial statement schedule, when considered in relation to the financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Pittsburgh, Pennsylvania

March 28, 2024


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$ $()$ Allowance for credit losses () Reserve for sales returns () Fiscal 2022 Inventory reserve$ $ $()$ Allowance for credit losses () Reserve for sales returns () Fiscal 2023 Inventory reserve$ $ $()$ Allowance for credit losses

() Reserve for sales returns ()

DICK'S SPORTING GOODS, INC. - Annual Report: 2024 (Form 10-K)

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