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Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 1998
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GART SPORTS COMPANY
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(Exact Name of Registrant as specified in its charter)
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Delaware 000-23515 84-1242802
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(State or other juris- (Commission file (IRS Employer
diction of incorporation) number) Identification No.)
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1000 Broadway
Denver, Colorado 80203
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(Address of principal (Zip Code)
executive offices)
(303) 861-1122
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On January 21, 1998, the Registrant issued the press release attached
hereto as Exhibit 99.1, which is incorporated herein by reference, announcing
financial results for its fourth quarter and fiscal year ended January 3, 1998
and also announcing the hiring of a new senior executive officer.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.1 Press release issued April 21, 1998 by the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GART SPORTS COMPANY
(Registrant)
/s/ Thomas T. Hendrickson
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Date: April 21, 1998 Thomas T. Hendrickson
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description Page
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99.1 Press release issued April 21, 1998 by the Registrant.
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EXHIBIT 99.1
GART SPORTS ANNOUNCES FOURTH QUARTER AND 1997 EARNINGS
Greg Waters Joins Company as Senior Vice President - Store Operations
DENVER--(BUSINESS WIRE)--April 21, 1998--Gart Sports Company (NASDAQ: GRTS -
news) today announced financial results for its fourth quarter and fiscal year
ended January 3, 1998, prior to its acquisition of Sportmart. In addition, the
Company announced that it has changed its fiscal year end to the Saturday
nearest January 31. Due to the change in year-end, the Company also reported
results for the 28-day period ended January 31, 1998 in its Form 10-K,
incorporating Gart Sports operations for the entire 28 days and Sportmart's
operations since January 9, 1998, the effective date of the acquisition.
For the fourth quarter ended January 3, 1998, net sales increased 16.0% to
$77.3 million versus $66.6 million in the prior year's quarter. Comparable
store sales for the quarter increased 8.5%. Net income for the fourth quarter
increased 33.3% to $5.4 million, or $0.97 per basic and $0.95 per diluted share
versus $4.0 million, or $0.73 per basic and diluted share in the prior year's
quarter.
For the fiscal year ended January 3, 1998, net sales increased 11.9% to $228.4
million versus $204.1 million in the prior year. Comparable store sales for the
year increased 5.6%. Net income for the full year, including $395,000 in costs
associated with the Sportmart acquisition, increased 50.0% to $6.7 million, or
$1.21 per basic share and $1.19 per diluted share versus $4.5 million, or $0.81
per basic and diluted share in the prior year. Gart Sports acquired Sportmart,
Inc. on January 9, 1998, in a transaction involving the issuance of 2,180,656
shares of Common Stock in exchange for all of the outstanding Common Stock of
Sportmart. There are currently 7,679,550 shares outstanding of the combined
company. At the time of the acquisition, Gart Sports operated 64 stores and
Sportmart operated 59 stores.
Separately, the Company announced that Greg Waters, 37, joined Gart Sports this
month as Senior Vice President - Store Operations from The Sports Authority
(NYSE: TSA - news). Mr. Waters most recent position during his seven-year
tenure at The Sports Authority was western Regional Vice President, a post he
had held since 1994.
Doug Morton, Chairman, President and Chief Executive Officer of Gart Sports
stated, ``We are very pleased with our financial performance. In addition to
solid top-line growth for the full year, we expanded our operating margins a
full percentage point, before merger expenses, through improving merchandise
margins and critical attention to our central cost structure.
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Our fourth quarter comp sales are particularly gratifying given that we
anniversaried a high single digit comparison from the prior year's quarter.''
Mr. Morton continued, ``The integration of Gart Sports and Sportmart into a
unified organization is proceeding smoothly and should result in a much leaner
company with core competencies in every area. By mid-year, we expect to
complete the consolidation and upgrade of our MIS systems, and will continue to
make merchandising improvements in both store bases throughout 1998. Most
importantly, with highly experienced retail executives like Greg Waters, a
proven specialist in store operations, we believe we have the right management
team to complete our transition plan and begin a targeted expansion program. We
currently plan to open three to seven new superstores this year and to begin a
refurbishment program for the Sportmart stores. As a newly public company with
exciting, innovative concepts and the financial flexibility to support growth,
we are confident in our prospects as we enter the new year.''
Gart Sports is the second largest full-line sporting goods retailer in the U.S.
and the leading full-line sporting goods retailer in the Rocky Mountain region,
with pro forma combined revenues of approximately $700 million. The Company
offers a comprehensive high-quality assortment of brand name sporting apparel
and equipment at competitive prices, and operates 122 stores in 16 states under
the Gart Sports and Sportmart names.
Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties, which may cause
the Company's actual results in future periods to differ materially from
forecasted results. Those risks include, among other things, the competitive
environment in the sporting goods industry in general and in the Company's
specific market area, inflation, changes in costs of goods and services and
economic conditions in general and in the Company's specific market area. Those
and other risks are more fully described in the Company's filings with the
Securities and Exchange Commission.
GART SPORTS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Share and Per Share Amounts)
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13 Weeks 13 Weeks 52 Weeks 52 Weeks
ended ended ended ended
January 3, January 4, January 3, January 4,
1998 1997 1998 1997
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Net sales $ 77,327 $ 66,641 $228,379 $204,126
Cost of goods sold,
buying, distribution
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and occupancy 51,818 45,323 164,289 148,420
Gross profit 25,509 21,318 64,090 55,706
Operating expenses 16,348 14,832 52,721 47,604
Merger integration costs 252 --- 395 ---
Operating income 8,909 6,486 10,974 8,102
Non-operating income
(expense):
Interest expense (303) (383) (983) (1,601)
Other income 35 339 776 637
(268) (44) (207) (964)
Income before income
taxes 8,641 6,442 10,767 7,138
Income tax expense 3,280 2,420 4,083 2,681
Net income $ 5,361 $ 4,022 $ 6,684 $ 4,457
Earnings per share:
Basic $ 0.97 $ 0.73 $ 1.21 $ 0.81
Diluted $ 0.95 $ 0.73 $ 1.19 $ 0.81
Weighted average
shares of common
stock outstanding 5,498,894 5,506,277 5,501,673 5,512,886
Weighted average
shares of common
stock and common
stock equivalents
outstanding 5,649,959 5,506,277 5,596,823 5,512,886
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