Dick's Sporting Goods 2011 Annual Report Download - page 77

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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 equipment, apparel and footwear through its 480 Dick’s stores and 81
Golf Galaxy stores as of January 28, 2012, the majority of which are located throughout the eastern
half of the United States. Additionally, the Company maintains e-commerce operations for both Dick’s
and Golf Galaxy.
Fiscal Year – The Company’s fiscal year ends on the Saturday closest to the end of January. Fiscal years
2011, 2010 and 2009 ended on January 28, 2012, January 29, 2011 and January 30, 2010, 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.
Use of Estimates in the Preparation of Financial Statements – The preparation of financial 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 financial 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. Cash
equivalents are considered Level 1 investments. Interest income from cash equivalents was $0.3 million,
$0.5 million and $0.1 million for fiscal 2011, 2010 and 2009, 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 28, 2012 and
January 29, 2011 include $81.6 million and $91.6 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 $2.4 million and $2.9 million as of January 28,
2012 and January 29, 2011, 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 valuation accounts and vendor allowances totaling $69.2 million and $75.2 million
at January 28, 2012 and January 29, 2011, respectively.
Property and Equipment – Property and equipment are recorded at cost and include capitalized leases.
For financial 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, fixtures and equipment 3-7 years
Vehicles 5 years
Dick’s Sporting Goods, Inc. 2011 Annual Report 55