Dick's Sporting Goods 2008 Annual Report Download - page 58

The proforma information does not necessarily refl ect 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.
Year Ended February 3, 2007
(Unaudited, in thousands, except per share amounts)
Net sales $ 3,388,837
Net income $ 111,958
Basic earnings per share $ 1.09
Diluted earnings per share $ 1.01
On November 30, 2007, the Company acquired all of the outstanding stock of Chick’s Sporting Goods, Inc. for approximately $69.2 million.
Chick’s shareholders did not subsequently meet specifi ed performance criteria that would have enabled them to earn up to $5 million in
additional contingent consideration.
The acquisition was accounted for using the purchase method in accordance with SFAS No. 141, Business Combinations.
Accordingly, the purchase price was allocated to tangible and identifi able intangible assets acquired and liabilities assumed
based on their estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of net assets
acquired was recorded as goodwill. Goodwill and identifi able intangible assets recorded in the acquisition will be tested for
impairment as required by SFAS No. 142. Based upon the purchase price allocation, the Company recorded $43.3 million of
goodwill as a result of the acquisition. None of the goodwill is deductible for tax purposes. The Company received an independent
appraisal for certain assets to determine their fair value. The purchase price allocation is fi nal.
4. Goodwill and Other Intangible Assets
As of January 31, 2009 and February 2, 2008, the Company had goodwill of $200.6 million and $304.4 million, respectively.
The changes in carrying value of goodwill during the years ended January 31, 2009 is as follows:
(In thousands)
Balance as of February 3, 2007 $ 156,628
Acquisitions of Golf Galaxy and Chick’s 147,041
Purchase price adjustments 697
Balance as of February 2, 2008 304,366
Purchase price adjustments 7,540
Impairment (111,312)
Balance as of January 31, 2009 $ 200,594
Based on macroeconomic factors impacting the specialty golf business and recent and forecasted specialty golf operating performance,
the Company determined that indicators of potential impairment were present during the fi scal quarter ended January 31, 2009. As a
result, the Company assessed the carrying value of goodwill and intangible assets with indefi nite lives for impairment acquired in its
purchase of Golf Galaxy. Upon completion of the impairment test, the Company determined that the goodwill of its Golf Galaxy reporting
unit was fully impaired and recorded a non-cash impairment charge of $111.3 million. No impairment charges were recorded for goodwill
during the years ended February 2, 2008 and February 3, 2007.
The Company acquired intangible assets totaling approximately $21.4 million during fi scal 2008, consisting primarily of the acquisition
of a trademark covering certain golf equipment, golf balls, golf accessories and other sporting goods and equipment. The trademarks
are indefi nite-lived intangible assets, which are not being amortized. The Company acquired intangible assets totaling approximately
$71.4 million during fi scal 2007, consisting primarily of a trade name and customer list resulting from the Company’s Golf Galaxy
acquisition. The trade name is an indefi nite-lived intangible asset, which is not being amortized. The customer list will be amortized
over fi ve years.
DICK’S SPORTING GOODS, INC. 2008 ANNUAL REPORT
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