Dick's Sporting Goods 2005 Annual Report Download - page 50

Download and view the complete annual report

Please find page 50 of the 2005 Dick's Sporting Goods annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 66

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66

2. Acquisition
On July 29, 2004, Dick’s Sporting Goods, Inc. acquired all of the common stock of Galyan’s for $16.75 per share in cash, and
Galyan’s became a wholly owned subsidiary of Dick’s. The Company has recorded $156.6 of goodwill as the excess of the
purchase price of $369.6 million over the fair value of the net amounts assigned to assets acquired and liabilities assumed.
The Company received an independent appraisal for certain assets to determine their fair value. The purchase price allocation
is final, except for any potential income tax changes that may arise. The following table summarizes the fair values of the assets
acquired and liabilities assumed:
(In thousands)
Inventory $ 158,780
Other current assets 65,603
Property and equipment, net 157,211
Other long–term assets, excluding goodwill 4,458
Goodwill 156,628
Favorable leases 5,310
Accounts payable (93,944)
Accrued expenses (61,223)
Other current liabilities (9,937)
Long-term debt (5,859)
Other long-term liabilities (7,455)
Fair value of net assets acquired, including intangibles $ 369,572
As of January 28, 2006, the Company had accrued expenses of $0.1 million related to Galyan’s associate severance and
relocation, and a net receivable of $0.6 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 2005 and fiscal 2004:
Liabilities
Associate established for Inventory reserve
severance, the closing of for discontinued
retention and Galyan’s stores Galyan’s
relocation and 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)
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.
dick’s sporting goods, inc. 2005 annual report
48