Dick's Sporting Goods 2007 Annual Report Download - page 56

Dick’s Sporting Goods, Inc. | 2007 Annual Report54
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.
February 3,
Year Ended 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. In addition, Chick’s shareholders have the opportunity to earn up to $5 million in additional consideration, upon
satisfaction by Chick’s of certain specified performance criteria through June 2008.
The acquisition is being accounted for using the purchase method in accordance with SFAS No. 141, Business Combinations.
Accordingly, we recorded the net assets at their estimated fair values, and included operating results in our Consolidated Statements
of Income from the date of acquisition. We allocated the purchase price on a preliminary basis using information currently available.
The Company is in the process of obtaining an independent appraisal for certain assets, including intangibles not yet identified,
and refining its internal fair value estimates; therefore, the allocation of the purchase price is preliminary and the final allocation
will likely differ. Based on the preliminary purchase price allocation, the Company has recorded $34.4 million of goodwill as a result
of the acquisition. None of the goodwill is deductible for tax purposes.
4. Integration Activities and Facility Closures
In connection with the Company’s acquisitions, we have incurred restructuring costs associated with the termination of employees,
facility consolidations and other costs directly related to the restructuring initiatives implemented. For these specific restructuring
costs recognized in conjunction with the cost from the Company’s acquisitions, we have accounted for these costs in accordance
with EITF 95-3, “Recognition of Liabilities Assumed in Connection with a Purchase Business Combination” and therefore are recognized
as liabilities in connection with the acquisition and charged to goodwill. Costs incurred in connection with all other business
integration activities have been recognized in the Consolidated Statements of Income.
The following table summarizes the activity in fiscal 2007, 2006 and 2005:
Associate Liabilities Inventory
Severance, Established for Reserve for
Retention and the Closing of Discontinued
Relocation Acquired Locations Merchandise Total
(In thousands)
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)
Cash paid (net of sublease receipts) — 121 — 121
Adjustments to the estimate ————
Store closing reserves established in conjuction with
the Golf Galaxy acquisition — 2,059 — 2,059
Balance at February 2, 2008 $ — $ 1,526 $ — $ 1,526