Dick's Sporting Goods 2006 Annual Report Download - page 52

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As of February 3, 2007, the Company had a net receivable of $0.7 million as our projected sublease cash flows exceed our
anticipated rent payments for two of the closed former Galyan’s stores. These costs were accounted for under Emerging Issues Task
Force No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination”.
The following table summarizes the activity in fiscal 2006, 2005 and 2004:
Liabilities
Established for Inventory
Associate the Closing of Reserve for
Severance, Galyan’s stores Discontinued
Retention and and Corporate Galyan’s
Relocation Headquarters Merchandise Total
(In thousands)
Liabilities and reserves established in conjuction with the Galyan’s
acquisition at July 31, 2004 $ 15,600 $ 15,838 $ 22,686 $ 54,124
Cash paid (11,381) (3,834) – (15,215)
Adjustments to the estimate (599) (8,331) – (8,930)
Clearance of discontinued Galyan’s merchandise – – (16,376)(16,376)
Balance at January 29, 2005 $ 3,620 $ 3,673 $ 6,310 $ 13,603
Cash paid (net of sublease receipts) (3,284) (4,242) – (7,526)
Adjustments to the estimate (216)– –(216)
Clearance of discontinued Galyan’s merchandise – – (6,310) (6,310)
Balance at January 28, 2006$120 $(569) $ – $ (449)
Cash paid (net of sublease receipts) (120) (85) – (205)
Adjustments to the estimate – – – –
Clearance of discontinued Galyan’s merchandise – – – –
Balance at February 3, 2007 $ – $ (654) $ – $ (654)
The $6.3 million and $16.4 million of inventory reserve utilized for the clearance of discontinued Galyan’s merchandise in fiscal 2005
and 2004, respectively, was recorded as a reduction of cost of sales.
The following unaudited proforma summary presents information as if Galyan’s had been acquired at the beginning of the
period presented. The proforma amounts include certain reclassifications to Galyan’s amounts to conform them to the Company’s
presentation, and an increase in interest expense of $3.9 million for the year ended January 29, 2005, to reflect the increase in
borrowings under the amended credit facility to finance the acquisition as if it had occurred at the beginning of the period presented.
The proforma amounts do not reflect any benefits from economies which may be achieved from combining the operations.
The proforma information does not necessarily reflect the actual results that would have occurred had the companies been
combined during the period presented, nor is it necessarily indicative of the future results of operations of the combined companies.
January 29,
Year Ended 2005
(Unaudited, in thousands, except per share amounts)
Net sales $ 2,448,643
Net income $56,452
Basic earnings per share $1.18
Diluted earnings per share $1.07
DICK’S SPORTING GOODS, INC. 2006 ANNUAL REPORT
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