Dick's Sporting Goods 2009 Annual Report Download - page 68

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant 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 510 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 respective dates of acquisition forward.
Fiscal Year — The Company’s fiscal year ends on the Saturday closest to the end of January. Fiscal years 2009, 2008 and 2007
ended on January 30, 2010, January 31, 2009 and February 2, 2008, respectively. All fiscal years presented include 52 weeks of
operations.
Principles of Consolidation — The consolidated financial statements include Dick’s Sporting Goods, Inc. and its wholly-owned
subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Accounting Standards Codification — On July 1, 2009, the Financial Accounting Standards Board (“FASB”) implemented the FASB
accounting standards codification (“ASC”) and hierarchy of generally accepted accounting principles as the sole source of
authoritative accounting principles generally accepted in the United States of America (“GAAP”). The FASB will no longer issue
new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will
issue Accounting Standards Updates (“ASU’s”). ASU’s will not be authoritative in their own right as they will only serve to update
the Codification. These changes and the Codification itself do not change GAAP. Pursuant to these provisions, the Company has
eliminated its references to the former GAAP authoritative pronouncements in its consolidated financial statements issued
subsequent to September 30, 2009. As the FASB’s codification was not intended to change existing authoritative guidance, this
referencing methodology has not had and will not have any impact on the Company’s consolidated financial statements.
Convertible Notes — Effective February 1, 2009, the Company adopted a new standard pertaining to accounting for convertible
debt instruments that may be settled in cash upon conversion. Under this guidance, cash settled convertible securities are
separated into their debt and equity components. The value assigned to the debt component is the estimated fair value, as of the
issuance date, of a similar debt instrument without the conversion feature, and the difference between the proceeds for the
convertible debt and the amount reflected as a debt liability is then recorded as additional paid-in capital. As a result, the debt is
effectively recorded at a discount reflecting its below market coupon interest rate. The debt is subsequently accreted to its par
value over its expected life, with the rate of interest that reflects the market rate at issuance being reflected in the Consolidated
Statements of Operations. The retroactive application of this guidance to the Company’s senior unsecured convertible notes
resulted in the recognition of additional pre-tax non-cash interest expense for fiscal 2008 and 2007 of $8.0 million and $7.5 million,
or $0.04 per diluted share for each period, respectively. Prior period information presented in this Form 10-K has been restated
for the adoption of this standard, where required.
The following table sets forth the effect of the retrospective application of the new standard on certain previously reported line
items (dollars in thousands):
As previously
reported Adjustment As adjusted
As previously
reported Adjustment As adjusted
Fiscal 2008 Fiscal 2007
Consolidated Statements of Operations
Interest expense . . . . . . . . . . . . . . . . . . . . . $ 10,963 $ 7,952 $ 18,915 $ 11,290 $ 7,450 $ 18,740
Provision for income taxes . . . . . . . . . . . . . . 56,867 (3,181) 53,686 102,491 (2,980) 99,511
Net (loss) income. . . . . . . . . . . . . . . . . . . . . (35,094) (4,771) (39,865) 155,036 (4,470) 150,566
66 Dick’s Sporting Goods, Inc. ¬2009 Annual Report