Dick's Sporting Goods 2008 Annual Report Download - page 51

Notes to Consolidated Financial Statements for the Fiscal Years
Ended 2008, 2007 and 2006
1. Basis of Presentation and Summary of Signifi cant Accounting Policies
Operations – Dick’s Sporting Goods, Inc. (together with its subsidiaries, the “Company”) is a specialty retailer selling sporting goods,
footwear and apparel through its 487 stores, the majority of which are located throughout the eastern half of the United States.
On February 13, 2007, the Company acquired Golf Galaxy, Inc. (“Golf Galaxy”) by means of merger of our wholly-owned subsidiary
with and into Golf Galaxy. On November 30, 2007, the Company acquired all of the outstanding stock of Chick’s Sporting Goods, Inc.
(“Chick’s”). The Consolidated Statements of Operations include the operations of Golf Galaxy and Chick’s from their dates of
acquisition forward for fi scal 2007.
Fiscal Year – The Company’s fi scal year ends on the Saturday closest to the end of January. Fiscal years 2008, 2007 and 2006 ended
on January 31, 2009, February 2, 2008 and February 3, 2007, respectively. All fi scal years presented include 52 weeks of operations
except fi scal 2006, which includes 53 weeks.
Principles of Consolidation – The consolidated fi nancial statements include Dick’s Sporting Goods, Inc. and its wholly-owned
subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements – The preparation of fi nancial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fi nancial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents – Cash and cash equivalents consist of cash on hand and all highly liquid instruments purchased with a
maturity of three months or less at the date of purchase. Interest income was $0.1 million, $1.6 million and $0.8 million for fi scal
2008, 2007 and 2006, respectively.
Cash Management – The Company’s cash management system provides for the reimbursement of all major bank disbursement
accounts on a daily basis. Accounts payable at January 31, 2009 and February 2, 2008 include $74.8 million and $84.7 million,
respectively, of checks drawn in excess of cash balances not yet presented for payment.
Accounts Receivable – Accounts receivable consists principally of amounts receivable from vendors and landlords. The allowance for
doubtful accounts totaled $3.3 million and $2.9 million, as of January 31, 2009 and February 2, 2008, respectively.
Inventories – Inventories are stated at the lower of weighted average cost or market. Inventory cost consists of the direct cost of
merchandise including freight. Inventories are net of shrinkage, obsolescence, other valuations and vendor allowances totaling
$78.0 million and $72.8 million at January 31, 2009 and February 2, 2008, respectively.
Property and Equipment – Property and equipment are recorded at cost and include capitalized leases. For fi nancial reporting
purposes, depreciation and amortization are computed using the straight-line method over the following estimated useful lives:
Buildings 40 years
Leasehold improvements 10-25 years
Furniture, fi xtures and equipment 3-7 years
Vehicles 5 years
DICK’S SPORTING GOODS, INC. 2008 ANNUAL REPORT 49