Dick's Sporting Goods 2006 Annual Report Download - page 54

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The $4.3 million of expense charged to earnings for the year was recorded in cost of goods sold, including occupancy and
distribution costs in the consolidated statements of income. The current portion of accrued store closing and relocation reserves
is recorded in accrued expenses and the long-term portion is recorded in long-term deferred revenue and other liabilities in the
consolidated balance sheets.
5. Property and Equipment
Property and equipment are recorded at cost and consist of the following as of the end of the fiscal periods:
2006 2005
(In thousands)
Buildings and land $ 31,820 $ 31,820
Leasehold improvements 374,879 313,075
Furniture, fixtures and equipment 330,757 280,376
737,456 625,271
Less: accumulated depreciation and amortization (304,385) (254,994)
Net property and equipment $433,071 $ 370,277
6. Accrued Expenses
Accrued expenses consist of the following as of the end of the fiscal periods:
2006 2005
(In thousands)
Accrued payroll, withholdings and benefits $52,988 $36,859
Accrued property and equipment 34,537 23,062
Other accrued expenses 102,840 76,599
Total accrued expenses $ 190,365 $ 136,520
7. Debt
The Company’s outstanding debt at February 3, 2007 and January 28, 2006 was as follows:
2006 2005
(In thousands)
Senior convertible notes $ 172,500 $ 172,500
Revolving line of credit ––
Capital leases 7,809 7,909
Third-party debt 708 752
Related party debt –40
Total debt 181,017 181,201
Less: current portion (152) (181)
Total long-term debt $ 180,865 $ 181,020
Senior Convertible Notes — On February 18, 2004, the Company completed a private offering of $172.5 million issue price of senior
unsecured convertible notes due 2024 (“senior convertible notes”) in transactions pursuant to Rule 144A under the Securities Act of
1933, as amended. Net proceeds of $145.6 million to the Company are net of transaction costs associated with the offering of
$6.2 million, and the net cost of a convertible bond hedge and a separate warrant transaction. The hedge and warrant transactions
effectively increase the conversion price associated with the senior convertible notes during the term of these transactions from 40%
to 100%, or from $39.31 to $56.16 per share, thereby reducing the potential dilutive economic effect to shareholders upon conversion.
The senior convertible notes bear interest at an annual rate of 2.375% of the issue price payable semi-annually on August 18th and
February 18th of each year until February 18, 2009, with the first interest payment made on August 18, 2004. After February 18, 2009,
the senior convertible notes will not pay cash interest, but the initial principal amount of the notes will accrete daily at an original
issue discount rate of 2.625%, until maturity on February 18, 2024, when a holder will receive $1,000 per note. The senior
DICK’S SPORTING GOODS, INC. 2006 ANNUAL REPORT
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