Dick's Sporting Goods, Inc 8-K, filed Sep 5, 2025
Dick's Sporting Goods, Inc. (DKS)
8-K
2025-09-05
For: 2025-09-05
View Original
Added on
April 12, 2026
About this 8-K
Dick's Sporting Goods, Inc filed this 8-K on September 5, 2025.
Items reported
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 5, 2025
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification Number)
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(Address of Principal Executive Offices)
(724 ) 273-3400
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on which
Registered
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to
use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 8.01. |
Other Events.
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DICK’S Sporting Goods, Inc. (the “Company” or “DICK’S Sporting Goods”) previously disclosed that, in connection with its anticipated acquisition (the “Acquisition”) of
Foot Locker, Inc. (“Foot Locker”), the Company commenced an offer to exchange (the “Exchange Offer”) any and all outstanding 4.000% Senior Notes due 2029 issued by Foot Locker (the “Foot Locker Notes”) for up to $400 million aggregate principal
amount of new 4.000% Senior Notes due 2029 issued by the Company and a consent payment, and a related consent solicitation, on behalf of Foot Locker (the “Consent Solicitation”), to adopt certain proposed amendments to the indenture governing the
Foot Locker Notes to, among other things, eliminate substantially all of the restrictive covenants, certain affirmative covenants and certain events of default (the “Proposed Amendments”). On June 20, 2025, after the requisite consents to adopt the
Proposed Amendments were received, Foot Locker entered into a supplemental indenture with, among others, the trustee for the Foot Locker Notes to effect the Proposed Amendments.
In connection with the Exchange Offer and the Consent Solicitation, the Company previously disclosed the unaudited pro forma financial information of the Company for the
fiscal year ended February 1, 2025 and the fiscal quarter ended May 3, 2025, which give effect to the Acquisition on the bases described therein. The Company is disclosing under this Item 8.01 updated unaudited pro forma financial information of the
Company that includes the fiscal quarter ended August 2, 2025. This information is included in Exhibit 99.1 and is incorporated into this Item 8.01 by reference.
| Item 9.01 |
Financial Statements and Exhibits.
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(d) Exhibits
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Exhibit No.
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Description
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Unaudited Pro Forma Condensed Combined Financial Information.
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104
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Cover Page Interactive Data File (formatted as Inline XBRL).
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Cautionary Note Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified as those that may predict, forecast, indicate or imply future results or performance and by forward-looking words such as “believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”,
“will”, “will be”, “will continue”, “will result”, “could”, “may”, “might” or any variations of such words or other words with similar meanings. Any statements about DICK’S Sporting Goods’, Foot Locker’s or the combined company’s plans, objectives,
expectations, strategies, beliefs, or future performance or events constitute forward-looking statements. These statements are subject to known and unknown risks, uncertainties, assumptions, estimates, and other important factors that change over
time, many of which may be beyond DICK’S Sporting Goods’, Foot Locker’s and the combined company’s control. DICK’S Sporting Goods’, Foot Locker’s and the combined company’s future performance and actual results may differ materially from those
expressed or implied in such forward-looking statements. Forward-looking statements should not be relied upon as a prediction of actual results. Forward-looking statements include statements regarding, among other things, the benefits of the
combination of DICK’S Sporting Goods and Foot Locker (the “Transaction”), including future financial and operating results and the combined company’s plans, objectives, expectations, intentions, growth strategies and culture and other statements that
are not historical facts.
Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements include, but are not limited
to, current macroeconomic conditions, including prolonged inflationary pressures, potential changes to international trade relations, geopolitical conflicts and adverse changes in consumer disposable income; supply chain constraints, delays and
disruptions; fluctuations in product costs and availability due to tariffs, currency exchange rate fluctuations, fuel price uncertainty and labor shortages; changes in consumer demand for products in certain categories and consumer lifestyle changes;
intense competition in the sporting goods industry; the overall success of DICK’S Sporting Goods’, Foot Locker’s and the combined company’s strategic plans and initiatives; DICK’S Sporting Goods’, Foot Locker’s and the combined company’s vertical
brand strategy and plans; DICK’S Sporting Goods’, Foot Locker’s and the combined company’s ability to optimize their respective distribution and fulfillment networks to efficiently deliver merchandise to their stores and the possibility of
disruptions; DICK’S Sporting Goods’, Foot Locker’s and the combined company’s dependence on suppliers, distributors, and manufacturers to provide sufficient quantities of quality products in a timely fashion; the potential impacts of unauthorized use
or disclosure of sensitive or confidential customer, employee, vendor or other information; the risk of problems with DICK’S Sporting Goods’, Foot Locker’s and the combined company’s information systems, including e-commerce platforms; DICK’S
Sporting Goods’, Foot Locker’s and the combined company’s ability to attract and retain customers, executive officers and employees; increasing labor costs; the effects of the performance of professional sports teams within DICK’S Sporting Goods’,
Foot Locker’s and the combined company’s core regions of operations; DICK’S Sporting Goods’, Foot Locker’s and the combined company’s ability to control expenses and manage inventory shrink; the seasonality of certain categories of DICK’S Sporting
Goods’, Foot Locker’s and the combined company’s operations and weather-related risks; changes in applicable tax laws, regulations, treaties, interpretations and other guidance; product safety and labeling concerns; the projected range of capital
expenditures of DICK’S Sporting Goods, Foot Locker and the combined company, including costs associated with new store development, relocations and remodels and investments in technology; plans to return capital to stockholders through dividends and
share repurchases, if any; DICK’S Sporting Goods’, Foot Locker’s and the combined company’s ability to meet market expectations; the influence of DICK’S Sporting Goods’ Class B common stockholders and associated possible scrutiny and public pressure;
compliance and litigation risks; DICK’S Sporting Goods’, Foot Locker’s and the combined company’s ability to protect their respective intellectual property rights or respond to claims of infringement by third parties; the availability of adequate
capital; obligations and other provisions related to DICK’S Sporting Goods’, Foot Locker’s and the combined company’s indebtedness; DICK’S Sporting Goods’, Foot Locker’s and the combined company’s future results of operations and financial condition;
the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the Transaction; the outcome of any legal proceedings that may be instituted against DICK’S Sporting Goods or Foot
Locker, including with respect to the Transaction; the possibility that the Transaction does not close when expected or at all because conditions to closing are not received or satisfied on a timely basis or at all; the risk that the benefits from
the Transaction, including anticipated cost synergies, may not be fully realized or may take longer to realize than expected; the ability to promptly and effectively integrate the businesses of DICK’S Sporting Goods and Foot Locker following the
closing of the Transaction; the dilution caused by the issuance of shares of DICK’S Sporting Goods common stock in the Transaction; the possibility that a Transaction may be more expensive to complete than anticipated, including as a result of
unexpected factors or events; the terms of the debt financing incurred in connection with the Transaction; reputational risk and potential adverse reactions of DICK’S Sporting Goods’ or Foot Locker’s customers, employees or other business partners;
and the diversion of DICK’S Sporting Goods’ and Foot Locker’s management’s attention and time from ongoing business operations and opportunities due to the Transaction. These factors are not necessarily all of the factors that could cause DICK’S
Sporting Goods’, Foot Locker’s or the combined company’s actual results, performance or achievements to differ materially from those expressed in or implied by any of the forward-looking statements. Other factors, including unknown or unpredictable
factors, also could harm DICK’S Sporting Goods’, Foot Locker’s or the combined company’s results.
For additional information on these and other factors that could affect DICK’S Sporting Goods’ or Foot Locker’s actual results, see the risk factors set
forth in DICK’S Sporting Goods’ and Foot Locker’s filings with the Securities and Exchange Commission (the “SEC”), including DICK’S Sporting Goods’ most recent Annual Report on Form 10-K, filed with the SEC on March 27, 2025, and its other filings
with the SEC, Foot Locker’s most recent Annual Report on Form 10-K, filed with the SEC on March 27, 2025, and its other filings with the SEC, as well as the risks described in DICK’S Sporting Goods’ registration statement on Form S-4 and definitive
proxy statement/prospectus relating to the Transaction. DICK’S Sporting Goods and Foot Locker disclaim and do not undertake any obligation to update or revise any forward-looking statement in this communication, except as required by applicable law
or regulation. Forward-looking statements included in this communication are made as of the date of this communication.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
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DICK’S SPORTING GOODS, INC.
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Date: September 5, 2025
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By:
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/s/ Navdeep Gupta
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Name:
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Navdeep Gupta
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Title:
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Executive Vice President,
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Chief Financial Officer
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Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
On May 15, 2025, DICK’S Sporting Goods, Inc., a Delaware corporation (the “Company” or “DICK’S Sporting Goods”), entered into an Agreement and Plan of
Merger (the “Merger Agreement”) by and among the Company, RJS Sub LLC, a New York limited liability company and a wholly owned subsidiary of the Company (“Merger Sub”), and Foot Locker, Inc., a New York corporation (“Foot Locker”). The Merger
Agreement provides that, upon the terms and subject to the conditions set forth therein, and at the closing of the transaction contemplated by the Merger Agreement, Merger Sub shall be merged with and into Foot Locker, with Foot Locker surviving as a
wholly owned subsidiary of the Company (the “Merger”).
The accompanying unaudited pro forma financial information is prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information, of the Securities Act of 1933, as amended (the “Securities Act”). The Unaudited Pro Forma Condensed Combined Balance Sheet is presented as if the transaction had occurred on
August 2, 2025, and the Unaudited Pro Forma Condensed Combined Statement of Operations for the twenty-six weeks ended August 2, 2025, and the year ended February 1, 2025, are presented to give effect to the Merger as if it occurred on February 3,
2024.
The unaudited pro forma condensed combined financial information gives effect to the accounting for the Merger (the “Transaction Accounting
Adjustments”). All terms defined in this section are used solely for the purposes of this section and do not apply to any other section.
In the accompanying unaudited pro forma condensed combined financial information, the historical consolidated financial statements of DICK’S Sporting
Goods and Foot Locker have been adjusted to depict the accounting for the Merger in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The pro forma adjustments are based upon available
information and certain assumptions that management believes are reasonable under the circumstances. All adjustments are preliminary and subject to change.
Under the terms of the Merger Agreement, each share of common stock, $0.01 par value per share, of Foot Locker (“Foot Locker Common Stock”) issued and
outstanding immediately prior to the effective time of the Merger (other than cancelled shares and converted shares) will be automatically converted into the right to receive, without interest, at the election of the holder of such share of Foot
Locker Common Stock: (a) $24.00 per share in cash (the “Cash Merger Consideration”) or (b) 0.1168 (the “Exchange Ratio”) shares of common stock (the “Stock Merger Consideration”) of the Company (“Company Common Stock”). The election is not subject
to a minimum or maximum amount of cash consideration or stock consideration. The election deadline for Foot Locker shareholders of record to elect the form of consideration that they wish to receive in connection with the Merger was 5:00 p.m.,
Eastern Time on August 29, 2025 (the “Election Deadline”). Final elections as of the Election Deadline are reflected in the accompanying unaudited pro forma financial information.
The Merger Agreement provides that:
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each outstanding Foot Locker time-based restricted stock unit held by an employee and each outstanding performance stock unit will be converted based on the Stock Merger
Consideration into a DICK’S Sporting Goods time-based restricted stock unit (with any applicable performance goals being deemed achieved at levels determined under the applicable award agreement or plan if not addressed in the award
agreement), which will otherwise continue to be subject to the same terms and conditions applicable to such award;
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| • |
each outstanding Foot Locker restricted stock unit (including any deferred units) held by a non-employee director will become fully vested (to the extent unvested) and converted
into cash based on the Cash Merger Consideration; and
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each outstanding in-the-money option, whether or not vested, will be cancelled and converted into the right to receive an amount in cash equal to the product of (a) the total
number of shares of Foot Locker Common Stock subject to such option multiplied by (b) the excess, if any, of the Cash Merger Consideration over the exercise price of such option (with any out-of-the-money options cancelled for no
consideration).
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In connection with the Merger Agreement, DICK’S Sporting Goods entered into a commitment letter, dated as of May 15, 2025, among DICK’S Sporting Goods
and Goldman Sachs Bank USA (“GS Bank”), supplemented by the joinder on May 30, 2025 of certain other financial institutions, pursuant to which GS Bank and such other financial institutions agreed to provide a senior unsecured 364-day bridge term loan
credit facility in an aggregate principal amount of up to $2.4 billion (the “Bridge Facility”) for the purpose of financing all or a portion of the Merger and related costs and expenses. The availability of the Bridge Facility commitments is
conditioned on the consummation of the Merger in accordance with the Merger Agreement and certain other customary closing conditions.
In June 2025, the aggregate Bridge Facility commitments were reduced to $1.75 billion, following the receipt of requisite consents to effect certain
proposed amendments that govern the Foot Locker Notes in connection with Company’s $400.0 million Exchange Offer for any and all of the outstanding Foot Locker Notes, as well as the Company’s entry into a new revolving credit facility during the
current quarter.
The Merger will be accounted for as a business combination using the acquisition method with DICK’S Sporting Goods assumed to be the accounting acquirer
in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”). Under this method of accounting, the consideration transferred will be allocated to
Foot Locker’s assets acquired and liabilities assumed mostly based upon their estimated fair values at the closing date. Any differences between the fair value of the consideration transferred and the fair value of the assets acquired, and
liabilities assumed will be recorded as goodwill. The process of valuing the net assets of Foot Locker at the closing date, the allocation of the consideration transferred, as well as evaluating accounting policies for conformity, is preliminary and
represents DICK’S Sporting Goods current best estimate and is subject to revision.
The unaudited pro forma condensed combined financial information and related notes are provided for illustrative purposes only and do not purport to
represent what the combined company’s actual results of operations or financial position would have been had the Merger been completed on the dates indicated, nor are they necessarily indicative of the combined company’s future results of operations
or financial position for any future period. The pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. It is likely that the actual adjustments upon the
completion of the Merger will differ from the pro forma adjustments, and it is possible the differences may be material.
The following unaudited pro forma condensed combined financial information gives effect to the Merger, which includes adjustments for the following:
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certain reclassifications to conform Foot Locker’s historical financial statement presentation to DICK’S Sporting Goods’ historical financial statement presentation;
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| • |
adjustments to reflect purchase accounting under ASC 805; and
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non-recurring transaction costs in connection with the Merger.
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1
Unaudited Pro Forma Condensed Combined Balance Sheet
As of August 2, 2025
(in thousands)
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DICK’S Sporting
Goods, Inc. (Historical)
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Foot Locker, Inc.
(Historical, adjusted)
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Transaction
Accounting
Adjustments
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Notes
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Pro Forma Combined
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ASSETS
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|||||||||||||||||||
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CURRENT ASSETS
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|||||||||||||||||||
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Cash and cash equivalents
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$
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1,231,022
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$
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299,000
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$
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(227,895
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)
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3A1
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$
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1,178,844
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|||||||||
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(62,319
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)
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3D
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||||||||||||||||
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(2,000
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)
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3E
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||||||||||||||||
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(6,664
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)
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3H
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||||||||||||||||
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(52,300
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)
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3I
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||||||||||||||||
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Accounts receivable, net
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223,879
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153,000
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-
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376,879
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|||||||||||||||
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Income taxes receivable
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29,792
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-
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-
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29,792
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|||||||||||||||
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Inventories, net
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3,403,914
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1,709,000
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-
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5,112,914
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|||||||||||||||
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Prepaid expenses and other current assets
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165,440
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211,000
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-
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376,440
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Total current assets
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5,054,047
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2,372,000
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(351,178
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)
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7,074,869
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Property and equipment, net
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2,431,782
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899,000
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80,000
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3B
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3,410,782
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Operating lease assets
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2,424,625
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2,052,000
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(126,000
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)
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3K
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4,350,625
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Intangible assets, net
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58,598
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227,000
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423,000
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3C
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708,598
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Goodwill
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245,857
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655,000
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(420,666
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)
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3M
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480,191
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||||||||||||
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Deferred income taxes
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3,387
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41,000
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-
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44,387
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|||||||||||||||
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Other assets
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472,475
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261,000
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(105,255
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)
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3A2
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624,284
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|||||||||||||
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(3,936
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)
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3E
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||||||||||||||||
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TOTAL ASSETS
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$
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10,690,771
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$
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6,507,000
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$
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(504,035
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)
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$
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16,693,736
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LIABILITIES AND STOCKHOLDERS' EQUITY
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|||||||||||||||||||
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CURRENT LIABILITIES
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|||||||||||||||||||
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Accounts payable
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$
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1,401,800
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$
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542,000
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$
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-
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$
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1,943,800
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|||||||||||
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Accrued expenses
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666,451
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357,000
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29,495
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3G
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1,052,946
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|||||||||||||
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Operating lease liabilities
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504,975
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482,000
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-
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986,975
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|||||||||||||||
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Income taxes payable
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34,391
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-
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-
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34,391
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|||||||||||||||
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Deferred revenue and other liabilities
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371,900
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108,000
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-
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479,900
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|||||||||||||||
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Total current liabilities
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2,979,517
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1,489,000
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29,495
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4,498,012
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|||||||||||||||
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LONG-TERM LIABILITIES
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|||||||||||||||||||
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Revolving credit borrowings
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-
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-
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-
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-
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|||||||||||||||
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Long-term debt and obligations under finance leases
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1,484,707
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440,000
|
1,473
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3E
|
|
1,903,808
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|||||||||||||
|
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(22,372
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)
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3J
|
|
|||||||||||||||
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Long-term operating lease liabilities
|
2,619,090
|
1,843,000
|
-
|
4,462,090
|
|||||||||||||||
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Deferred income tax
|
40,535
|
-
|
87,273
|
3L
|
|
127,808
|
|||||||||||||
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Other long-term liabilities
|
211,836
|
157,000
|
-
|
368,836
|
|||||||||||||||
|
Total long-term liabilities
|
4,356,168
|
2,440,000
|
66,374
|
6,862,542
|
|||||||||||||||
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COMMITMENTS AND CONTINGENCIES
|
-
|
-
|
-
|
-
|
|||||||||||||||
2
Unaudited Pro Forma Condensed Combined Balance Sheet
As of August 2, 2025
(in thousands)
|
|
DICK’S Sporting
Goods, Inc. (Historical)
|
Foot Locker, Inc.
(Historical, adjusted)
|
Transaction Accounting
Adjustments
|
Notes
|
Pro Forma Combined
|
||||||||||||||
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STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||
|
Common stock
|
556
|
817,000
|
100
|
3A1
|
656
|
||||||||||||||
|
|
(817,000
|
)
|
3F
|
||||||||||||||||
|
Class B common stock
|
236
|
-
|
-
|
236
|
|||||||||||||||
|
Additional paid-in capital
|
1,502,184
|
-
|
2,105,363
|
3A1, 3G
|
3,607,547
|
||||||||||||||
|
Retained earnings
|
6,843,448
|
2,093,000
|
876
|
3A2
|
6,716,081
|
||||||||||||||
|
|
(62,319
|
)
|
3D
|
||||||||||||||||
|
|
(2,093,000
|
)
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3F
|
||||||||||||||||
|
|
(65,924
|
)
|
3G
|
||||||||||||||||
|
Accumulated other comprehensive loss
|
(426
|
)
|
(327,000
|
)
|
327,000
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3F
|
(426
|
)
|
|||||||||||
|
Treasury stock, at cost
|
(4,990,912
|
)
|
(5,000
|
)
|
5,000
|
3F
|
(4,990,912
|
)
|
|||||||||||
|
Total stockholders’ equity
|
3,355,086
|
2,578,000
|
(599,904
|
)
|
5,333,182
|
||||||||||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
10,690,771
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$
|
6,507,000
|
$
|
(504,035
|
)
|
$
|
16,693,736
|
||||||||||
See accompanying notes to unaudited pro forma condensed combined financial information.
3
Unaudited Pro Forma Condensed Combined Statement of Operations
For the twenty-six weeks ended August 2, 2025
(USD in thousands, except per share amounts)
|
DICK’S Sporting
Goods, Inc. (Historical) |
Foot Locker, Inc.
(Historical, adjusted)
|
Transaction
Accounting
Adjustments
|
Notes
|
Pro Forma Combined
|
|||||||||||||||
|
Net Sales
|
$
|
6,821,293
|
$
|
3,651,000
|
-
|
$
|
10,472,293
|
||||||||||||
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Cost of goods sold, including occupancy and distribution costs
|
4,304,935
|
2,693,000
|
1,474
|
4A
|
6,979,660
|
||||||||||||||
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(19,749
|
)
|
4J
|
|||||||||||||||||
|
GROSS PROFIT
|
2,516,358
|
958,000
|
18,275
|
3,492,633
|
|||||||||||||||
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Selling, general and administrative expenses
|
1,664,265
|
1,255,000
|
337
|
4A
|
2,919,791
|
||||||||||||||
|
189
|
4D
|
||||||||||||||||||
|
Merger and integration costs
|
8,028
|
-
|
-
|
8,028
|
|||||||||||||||
|
Pre-opening expenses
|
25,763
|
-
|
-
|
25,763
|
|||||||||||||||
|
INCOME FROM OPERATIONS
|
818,302
|
(297,000
|
)
|
17,749
|
539,051
|
||||||||||||||
|
Interest expense
|
28,256
|
11,000
|
240
|
4G
|
41,295
|
||||||||||||||
|
1,799
|
4H
|
||||||||||||||||||
|
Other expense (income)
|
(67,493
|
)
|
(8,000
|
)
|
-
|
(75,493
|
)
|
||||||||||||
|
INCOME BEFORE INCOME TAXES
|
857,539
|
(300,000
|
)
|
15,710
|
573,249
|
||||||||||||||
|
Provision for income taxes
|
211,849
|
101,000
|
4,085
|
4I
|
316,934
|
||||||||||||||
|
NET INCOME
|
$
|
645,690
|
$
|
(401,000
|
)
|
$
|
11,625
|
$
|
256,315
|
||||||||||
|
EARNINGS PER COMMON SHARE:
|
|||||||||||||||||||
|
Basic
|
$
|
8.15
|
$
|
(4.20
|
)
|
$
|
2.89
|
||||||||||||
|
Diluted
|
$
|
7.95
|
$
|
(4.20
|
)
|
$
|
2.82
|
||||||||||||
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
|
|||||||||||||||||||
|
Basic
|
79,244
|
95,404
|
88,826
|
||||||||||||||||
|
Diluted
|
81,259
|
95,404
|
91,017
|
||||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial information.
4
Unaudited Pro Forma Condensed Combined Statement of Operations
For the year ended February 1, 2025
(USD in thousands, except per share amounts)
|
DICK’S Sporting
Goods, Inc. (Historical)
|
Foot Locker, Inc.
(Historical, adjusted)
|
Transaction
Accounting
Adjustments
|
Notes
|
Pro Forma Combined
|
|||||||||||||||
|
Net Sales
|
$
|
13,442,849
|
$
|
7,988,000
|
-
|
$
|
21,430,849
|
||||||||||||
|
Cost of goods sold, including occupancy and distribution costs
|
8,617,153
|
5,785,000
|
8,737
|
4A
|
14,371,392
|
||||||||||||||
|
(39,498
|
)
|
4J
|
|||||||||||||||||
|
GROSS PROFIT
|
4,825,696
|
2,203,000
|
30,761
|
7,059,457
|
|||||||||||||||
|
Selling, general and administrative expenses
|
3,294,272
|
2,100,000
|
2,296
|
4A
|
5,468,119
|
||||||||||||||
|
(5,000
|
)
|
4B
|
|||||||||||||||||
|
3,963
|
4D
|
||||||||||||||||||
|
65,924
|
4E
|
||||||||||||||||||
|
6,664
|
4F
|
||||||||||||||||||
|
Merger and integration costs
|
-
|
-
|
58,964
|
4C
|
58,964
|
||||||||||||||
|
Pre-opening expenses
|
57,492
|
-
|
-
|
57,492
|
|||||||||||||||
|
INCOME FROM OPERATIONS
|
1,473,932
|
103,000
|
(102,050
|
)
|
1,474,882
|
||||||||||||||
|
Interest expense
|
52,987
|
24,000
|
3,355
|
4C
|
84,400
|
||||||||||||||
|
480
|
4G
|
||||||||||||||||||
|
3,578
|
4H
|
||||||||||||||||||
|
Other expense (income)
|
(98,088
|
)
|
28,000
|
(876
|
)
|
4K
|
(70,964
|
)
|
|||||||||||
|
INCOME BEFORE INCOME TAXES
|
1,519,033
|
51,000
|
(108,587
|
)
|
1,461,446
|
||||||||||||||
|
Provision for income taxes
|
353,725
|
33,000
|
(8,755
|
)
|
4I
|
377,970
|
|||||||||||||
|
NET INCOME
|
$
|
1,165,308
|
$
|
18,000
|
$
|
(99,832
|
)
|
$
|
1,083,476
|
||||||||||
|
EARNINGS PER COMMON SHARE:
|
|||||||||||||||||||
|
Basic
|
$
|
14.48
|
$
|
0.19
|
$
|
12.03
|
|||||||||||||
|
Diluted
|
$
|
14.05
|
$
|
0.19
|
$
|
11.69
|
|||||||||||||
|
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
|
|||||||||||||||||||
|
Basic
|
80,468
|
95,000
|
90,050
|
||||||||||||||||
|
Diluted
|
82,929
|
95,500
|
92,652
|
||||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial information.
5
Note 1. Notes to Unaudited Pro Forma Condensed Combined Financial Information
Basis of Presentation
The accompanying unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X, Pro Forma Financial Information, of the Securities Act. The historical information of DICK’S Sporting Goods and Foot Locker is presented in accordance with U.S. GAAP.
The unaudited pro forma condensed combined financial information is prepared using the acquisition method of accounting in accordance with the business
combination accounting guidance under ASC 805, with DICK'S Sporting Goods as the accounting acquirer for the Merger. Under ASC 805, assets acquired and liabilities assumed in a business combination are recognized and measured at the Merger date fair
value. Transaction costs associated with a business combination are expensed as incurred. The excess of consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill. Accordingly, the Merger
Consideration allocation and related adjustments reflected in this unaudited pro forma condensed combined financial information are preliminary and subject to revision based on a final determination of fair value.
The unaudited pro forma condensed combined financial information is presented as follows:
| • |
The unaudited pro forma condensed combined balance sheet as of August 2, 2025, was prepared based on (i) the historical unaudited condensed consolidated balance sheet of DICK'S
Sporting Goods as of August 2, 2025, and (ii) the historical unaudited condensed consolidated balance sheet of Foot Locker as of August 2, 2025.
|
| • |
The unaudited pro forma condensed combined statement of operations for the twenty-six weeks ended August 2, 2025, was prepared based on (i) the historical unaudited condensed
consolidated statement of operations of DICK'S Sporting Goods for the twenty-six weeks ended August 2, 2025, and (ii) the historical unaudited condensed consolidated statement of operations of Foot Locker for the twenty-six weeks ended August
2, 2025.
|
| • |
The unaudited pro forma condensed combined statement of operations for the year ended February 1, 2025, was prepared based on (i) the historical audited consolidated statement of
operations of DICK'S Sporting Goods for the year ended February 1, 2025, and (ii) the historical audited consolidated statement of operations of Foot Locker for the year ended February 1, 2025.
|
The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dis-synergies, operating efficiencies, or
cost savings that may result from the integration costs that may be incurred. The pro forma adjustments represent DICK’S Sporting Goods best estimates and are based upon currently available information and certain assumptions that DICK’S Sporting
Goods believes are reasonable under the circumstances.
The unaudited pro forma condensed combined financial information is provided for informational purposes only and may not be indicative of the operating
results that would have occurred if the Merger had been completed as of the dates set forth above, nor is it indicative of the future results of DICK’s Sporting Goods following the Merger. In determining the preliminary estimate of fair values of
assets acquired and liabilities assumed of Foot Locker, DICK’S Sporting Goods used publicly available benchmarking information as well as a variety of other assumptions, including market participant assumptions. The pro forma purchase price
allocation relating to the Merger is preliminary and subject to change, as additional information becomes available and as additional analyses are performed. There can be no assurances that the valuations will not result in material changes to this
purchase price allocation. Any increase or decrease in fair values of the net assets as compared with the unaudited pro forma condensed combined financial information may change the amount of the total acquisition consideration allocated to goodwill
and other assets and liabilities and may impact the Unaudited Pro Forma Condensed Combined Statements of Operations due to adjustments in the depreciation and amortization expense of the adjusted assets.
6
Note 2. Accounting Policies and Reclassifications
During the preparation of this unaudited pro forma condensed combined financial information, management performed a preliminary review of Foot Locker’s
financial information to identify differences in accounting policies compared to those of DICK’S Sporting Goods and differences in financial statement presentation compared to the presentation of DICK’S Sporting Goods. At the time of preparing the
unaudited pro forma condensed combined financial information, other than the adjustments described herein, DICK’S Sporting Goods is not aware of any other material differences. However, DICK’S Sporting Goods will continue to perform its detailed
review of Foot Locker’s accounting policies. Upon completion of that review, differences may be identified between the accounting policies of DICK’S Sporting Goods and Foot Locker that when conformed could have a material impact on the unaudited pro
forma condensed combined financial information.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of August 2, 2025
(in thousands)
|
DICK’S Sporting Goods, Inc.
|
Foot Locker, Inc.
|
Foot
Locker, Inc.
|
Reclassification Adjustments
|
Notes
|
Foot
Locker, Inc.
|
||||||||||||
|
Assets
|
|||||||||||||||||
|
Current assets
|
|||||||||||||||||
|
Cash and cash equivalents
|
Cash and cash equivalents
|
$
|
299,000
|
$
|
299,000
|
||||||||||||
|
Accounts receivable, net
|
-
|
153,000
|
(2f)
|
|
153,000
|
||||||||||||
|
Income taxes receivable
|
-
|
-
|
|||||||||||||||
|
Inventories, net
|
Merchandise inventories
|
1,709,000
|
1,709,000
|
||||||||||||||
|
Prepaid expenses and other current assets
|
Other current assets
|
364,000
|
(153,000
|
)
|
(2f)
|
|
211,000
|
||||||||||
|
Total Current assets
|
2,372,000
|
-
|
2,372,000
|
||||||||||||||
|
Property and equipment, net
|
Property and equipment, net
|
899,000
|
899,000
|
||||||||||||||
|
Operating lease assets
|
Operating lease right-of-use assets
|
2,052,000
|
2,052,000
|
||||||||||||||
|
Intangible assets, net
|
Other intangible assets, net
|
227,000
|
227,000
|
||||||||||||||
|
Goodwill
|
Goodwill
|
655,000
|
655,000
|
||||||||||||||
|
Deferred income taxes
|
Deferred taxes
|
41,000
|
41,000
|
||||||||||||||
|
Other assets
|
Other assets
|
146,000
|
115,000
|
(2b)
|
|
261,000
|
|||||||||||
|
|
Minority investments
|
115,000
|
(115,000
|
)
|
(2b)
|
|
-
|
||||||||||
|
Total Assets
|
$
|
6,507,000
|
-
|
$
|
6,507,000
|
||||||||||||
|
Liabilities and Stockholders’ equity
|
|||||||||||||||||
|
Current liabilities
|
|||||||||||||||||
|
Accounts payable
|
Accounts payable
|
$
|
542,000
|
$
|
542,000
|
||||||||||||
|
Accrued expenses
|
Accrued and other liabilities
|
461,000
|
(51,000
|
)
|
(2a)
|
|
357,000
|
||||||||||
|
(25,000
|
)
|
(2d)
|
|
||||||||||||||
|
(28,000
|
)
|
(2e)
|
|
||||||||||||||
|
Operating lease liabilities
|
Current portion of lease obligations
|
482,000
|
482,000
|
||||||||||||||
|
|
Current portion of debt and obligations under finance leases
|
4,000
|
(4,000
|
)
|
(2c)
|
|
-
|
||||||||||
|
Income taxes payable
|
-
|
-
|
|||||||||||||||
|
Deferred revenue and other liabilities
|
51,000
|
(2a)
|
|
108,000
|
|||||||||||||
|
4,000
|
(2c)
|
|
|||||||||||||||
|
25,000
|
(2d)
|
|
|||||||||||||||
|
28,000
|
(2e)
|
|
|||||||||||||||
|
Total Current liabilities
|
1,489,000
|
-
|
1,489,000
|
||||||||||||||
|
Revolving credit borrowings
|
- | - | |||||||||||||||
|
Long-term operating lease liabilities
|
Long-term lease obligations
|
1,843,000
|
1,843,000
|
||||||||||||||
|
|
Long-term debt and obligations under finance leases
|
440,000
|
440,000
|
||||||||||||||
|
Other long-term liabilities
|
Other liabilities
|
157,000
|
157,000
|
||||||||||||||
|
Total Long-term liabilities
|
2,440,000
|
-
|
2,440,000
|
||||||||||||||
|
Commitments and contingencies
|
|||||||||||||||||
|
Stockholders' Equity
|
|||||||||||||||||
|
Common stock
|
Common stock
|
817,000
|
817,000
|
||||||||||||||
|
Class B common stock
|
-
|
||||||||||||||||
|
Additional paid-in capital
|
-
|
-
|
-
|
||||||||||||||
|
Retained earnings
|
Retained earnings
|
2,093,000
|
-
|
2,093,000
|
|||||||||||||
|
Accumulated other comprehensive loss
|
Accumulated other comprehensive loss
|
(327,000
|
)
|
(327,000
|
)
|
||||||||||||
|
Treasury stock, at cost
|
Treasury stock at cost
|
(5,000
|
)
|
(5,000
|
)
|
||||||||||||
|
Total stockholders’ equity
|
2,578,000
|
-
|
2,578,000
|
||||||||||||||
|
Total liabilities and stockholders’ equity
|
$
|
6,507,000
|
-
|
$
|
6,507,000
|
||||||||||||
7
(2a) Reclassification of Customer Loyalty Program from “Accrued and Other Liabilities” to “Deferred revenue and other liabilities”.
(2b) Reclassification of “Minority Investments” to “Other assets”.
(2c) Reclassification of “Current portion of debt and obligations under finance leases” to “Deferred revenue and other liabilities”.
(2d) Reclassification of Gift Card Liability from “Accrued and Other Liabilities” to “Deferred revenue and other liabilities”.
(2e) Reclassification of Customer Deposit from “Accrued and Other Liabilities” to “Deferred revenue and other liabilities”.
(2f) Reclassification of Net Receivables from “Other current assets” to “Accounts receivable, net”.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the twenty-six weeks ended August 2, 2025
(in thousands)
|
DICK’S Sporting Goods,
Inc.
|
Foot Locker, Inc.
|
Foot Locker,
Inc.
|
Reclassification
Adjustments
|
Notes
|
Foot
Locker,
Inc.
|
||||||||||||
|
Net Sales
|
Sales
|
$
|
3,639,000
|
$
|
12,000
|
(2g)
|
$
|
3,651,000
|
|||||||||
|
|
Other revenue
|
|
12,000
|
|
(12,000
|
) |
(2g)
|
|
|
- | |||||||
|
Cost of goods sold, including occupancy and distribution costs
|
Cost of sales
|
2,629,000
|
83,000
|
(2h)
|
|
2,693,000
|
|||||||||||
|
(19,000
|
)
|
(2k)
|
|
||||||||||||||
|
GROSS PROFIT
|
1,022,000
|
(64,000
|
)
|
958,000
|
|||||||||||||
|
Selling, general and administrative expenses
|
Selling, general and administrative expenses
|
926,000
|
19,000
|
(2h)
|
|
1,255,000
|
|||||||||||
|
291,000
|
(2i)
|
|
|||||||||||||||
|
19,000
|
(2k)
|
|
|||||||||||||||
|
|
Depreciation and amortization
|
102,000
|
(102,000
|
)
|
(2h)
|
|
-
|
||||||||||
|
|
Impairment and other
|
291,000
|
(291,000
|
)
|
(2i)
|
|
-
|
||||||||||
|
Pre-opening expenses
|
-
|
-
|
|||||||||||||||
|
INCOME FROM OPERATIONS
|
(297,000
|
)
|
-
|
(297,000
|
) |
||||||||||||
|
Interest expense
|
Interest expense, net
|
5,000
|
6,000
|
(2j)
|
|
11,000
|
|||||||||||
|
Other expense (income)
|
Other expense (income), net
|
(2,000
|
)
|
(6,000
|
)
|
(2j)
|
|
(8,000
|
) |
||||||||
|
INCOME BEFORE INCOME TAXES
|
(300,000
|
)
|
-
|
(300,000
|
) |
||||||||||||
|
Provision for income taxes
|
Income tax expense (benefit)
|
101,000
|
101,000
|
||||||||||||||
|
NET INCOME
|
$
|
(401,000
|
)
|
-
|
$
|
(401,000
|
) |
||||||||||
8
(2g) Reclassification from “Other revenue” to “Net Sales”.
(2h) Reclassification of Depreciation expense from “Depreciation and amortization” to “Selling, general and administrative expenses” and “Cost of
goods sold, including occupancy and distribution costs” for Non-Store Assets and Store Assets, respectively.
(2i) Reclassification from “Impairment and other” to “Selling, general and administrative expenses”.
(2j) Reclassification of Interest income from “Interest expense, net” to “Other expense (income)”.
(2k) Reclassification of buyers’ compensation from “Cost of goods sold, including occupancy and distribution costs” to “Selling, general and
administrative expenses”.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the year ended February 1, 2025
(in thousands)
|
DICK’S Sporting Goods, Inc.
|
Foot Locker, Inc.
|
Foot Locker, Inc.
|
Reclassification Adjustments
|
Notes
|
Foot Locker, Inc.
|
||||||||||||
|
Net Sales
|
Sales
|
$
|
7,971,000
|
$
|
17,000
|
(2l)
|
|
$
|
7,988,000
|
||||||||
|
|
Licensing revenue
|
17,000
|
(17,000
|
)
|
(2l)
|
|
-
|
||||||||||
|
Cost of goods sold, including occupancy and distribution costs
|
Cost of sales
|
5,666,000
|
156,000
|
(2m)
|
|
5,785,000
|
|||||||||||
|
(37,000
|
)
|
(2q)
|
|
||||||||||||||
|
GROSS PROFIT
|
2,322,000
|
(119,000
|
)
|
2,203,000
|
|||||||||||||
|
Selling, general and administrative expenses
|
Selling, general and administrative expenses
|
1,920,000
|
41,000
|
(2m)
|
|
2,100,000
|
|||||||||||
|
5,000
|
(2n)
|
|
|||||||||||||||
|
97,000
|
(2o)
|
|
|||||||||||||||
|
37,000
|
(2q)
|
|
|||||||||||||||
|
|
Depreciation and amortization
|
202,000
|
(197,000
|
)
|
(2m)
|
|
-
|
||||||||||
|
(5,000
|
)
|
(2n)
|
|
||||||||||||||
|
|
Impairment and other
|
97,000
|
(97,000
|
)
|
(2o)
|
|
-
|
||||||||||
|
Pre-opening expenses
|
-
|
-
|
|||||||||||||||
|
INCOME FROM OPERATIONS
|
103,000
|
-
|
103,000
|
||||||||||||||
|
Interest expense
|
Interest expense, net
|
8,000
|
16,000
|
(2p)
|
24,000
|
||||||||||||
|
Other expense (income)
|
Other expense (income), net
|
44,000
|
(16,000
|
)
|
(2p)
|
|
28,000
|
||||||||||
|
INCOME BEFORE INCOME TAXES
|
51,000
|
-
|
51,000
|
||||||||||||||
|
Provision for income taxes
|
Income tax expense (benefit)
|
33,000
|
33,000
|
||||||||||||||
|
NET INCOME
|
$
|
18,000
|
-
|
$
|
18,000
|
||||||||||||
(2l) Reclassification from “Licensing revenue” to “Net Sales”.
(2m) Reclassification of Depreciation expense from “Depreciation and amortization” to “Selling, general and administrative expenses” and “Cost of
goods sold, including occupancy and distribution costs" for Non-Store Assets and Store Assets, respectively.
(2n) Reclassification of Amortization expense from “Depreciation and amortization" to “Selling, general and administrative expenses”.
(2o) Reclassification from “Impairment and other” to “Selling, general and administrative expenses”.
(2p) Reclassification of Interest income from “Interest expense, net” to “Other expense (income)”.
(2q) Reclassification of buyers’ compensation from “Cost of goods sold, including occupancy and distribution costs" to “Selling, general and
administrative expenses”.
9
Note 3. Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet
Transaction Accounting Adjustments
The adjustments included in the Unaudited Pro Forma Condensed Combined Balance Sheet as of August 2, 2025, are detailed below:
(3A1) The accounting for the Merger is based on currently available information and is considered preliminary. The final accounting for the Merger may differ materially
from that presented in these unaudited pro forma condensed combined financial information. For the preparation of pro forma financial information, the Cash Merger Consideration and Stock Merger Consideration is reflective of the final Foot Locker
share elections as of the Election Deadline.
Refer to the following table for the preliminary estimated fair value of consideration transferred:
|
(in thousands)
|
As of August 2, 2025
|
|||
|
Cash Consideration (Note A)
|
$
|
222,447
|
||
|
Stock Consideration (Note B)
|
2,039,045
|
|||
|
Add: Settlement of equity awards (1)
|
5,448
|
|||
|
Add: Pre-combination value of replaced equity awards (2)
|
29,989
|
|||
|
Add: Fair value of existing equity interest held by DICK’S Sporting Goods (3)
|
106,131
|
|||
|
Fair value of consideration transferred
|
$
|
2,403,060
|
||
(1) Represents the estimated fair value of outstanding Foot Locker DSU Awards, Foot Locker RSU Awards, and in-the-money options that are
expected to be settled in cash at close.
(2) Represents the estimated fair value of outstanding Foot Locker RSU Awards (other than non-employee director Foot Locker RSU Awards)
and Foot Locker PSU Awards granted to employees attributable to pre-combination services as well as Foot Locker executives whose awards will be converted to Company Common Stock as part of their severance package.
(3) Represents the estimated fair value of the 4.3 million shares of Foot Locker Common Stock held by DICK’S Sporting Goods based on the
Stock Merger Consideration.
Note A: Cash Consideration
|
(in thousands, except per share data; figures below may not foot due to rounding of shares)
|
As of August 2, 2025
|
|||
|
Foot Locker's shares outstanding as of August 29, 2025, whereby the Cash Merger Consideration was elected (excluding shares owned by DICK’S
Sporting Goods)
|
9,269
|
|||
|
Price per share as per Merger Agreement
|
$
|
24.00
|
||
|
Cash Consideration
|
$
|
222,447
|
||
Note B: Stock Consideration
|
(in thousands, except per share data; figures below may not foot due to rounding of shares)
|
As of August 2, 2025
|
|||
|
Foot Locker's shares outstanding as of August 29, 2025, where the Stock Merger Consideration was elected (excluding shares owned by DICK’S
Sporting Goods)
|
82,037
|
|||
|
Exchange Ratio as per Merger Agreement
|
0.1168
|
|||
|
Total estimated outstanding shares
|
9,582
|
|||
|
DICK’S Sporting Goods stock price as on August 29, 2025
|
212.80
|
|||
|
Stock Consideration
|
$
|
2,039,045
|
||
(3A2) In connection with DICK’S Sporting Goods
purchase of 4.3 million shares of Foot Locker Common Stock, this adjustment reflects the elimination of DICK’S Sporting Goods’ investment. The associated increase in retained earnings is related to the gain recorded in the Unaudited Pro Forma
Condensed Combined Statement of Operations for the year end February 1, 2025. Refer to 4K for more information.
10
|
(In thousands)
|
As of August 2, 2025
|
|||
|
Common stock
|
100
|
|||
|
Additional paid-in-capital
|
2,068,934
|
|||
|
Cash
|
227,895
|
|||
|
Other assets
|
105,255
|
|||
|
Retained earnings
|
876
|
|||
The actual value of DICK’S Sporting Goods common stock to be issued will depend on the per share price of DICK’S Sporting Goods common stock at the
closing date of the Merger, and therefore, the actual stock consideration will fluctuate with the market price of DICK’S Sporting Goods common stock until the Merger is completed. The following table shows the effect of changes in DICK’S Sporting
Goods stock price and the resulting impact on the estimated stock consideration:
|
(In thousands, except per share data)
|
||||||||
|
Share Price Sensitivity
|
DICK’S Sporting
Goods Stock Price
|
Consideration
Transferred
|
||||||
|
As presented
|
$
|
212.80
|
2,403,060
|
|||||
|
10% increase
|
$
|
234.08
|
2,606,965
|
|||||
|
10% decrease
|
$
|
191.52
|
2,199,156
|
|||||
Preliminary Purchase Price Allocation
The determination of the fair value of the identifiable assets of Foot Locker and the allocation of the estimated Merger consideration to these
identifiable assets and liabilities is preliminary and is pending finalization of various estimates, inputs and analyses. The final purchase price allocation will be determined when DICK’S Sporting Goods has completed the detailed valuations and
necessary calculations. The final Merger consideration allocation may be materially different than that reflected in the preliminary estimated Merger consideration allocation presented herein. Any increase or decrease in fair values of the net assets
as compared with the unaudited pro forma condensed combined financial information may change the allocation of total Merger consideration to goodwill and other assets and liabilities and may impact the combined company statement of operations due to
adjustments in the depreciation and amortization of the adjusted assets.
|
(In thousands)
|
Fair value
|
|||
|
Cash and cash equivalents
|
$
|
299,000
|
||
|
Accounts receivable, net
|
153,000
|
|||
|
Inventories, net
|
1,709,000
|
|||
|
Prepaid expenses and other current assets
|
211,000
|
|||
|
Property and equipment, net
|
979,000
|
|||
|
Operating lease assets
|
1,926,000
|
|||
|
Intangible assets, net
|
650,000
|
|||
|
Other assets
|
257,064
|
|||
|
Total assets
|
$
|
6,184,064
|
||
|
Accounts payable
|
542,000
|
|||
|
Accrued expenses
|
415,964
|
|||
|
Current portion of lease obligations
|
482,000
|
|||
|
Deferred revenue and other liabilities
|
108,000
|
|||
|
Long-term debt and obligations under finance leases
|
421,101
|
|||
|
Long-term operating lease liabilities
|
1,843,000
|
|||
|
Deferred income taxes
|
46,273
|
|||
|
Other long-term liabilities
|
157,000
|
|||
|
Net assets acquired
|
2,168,726
|
|||
|
Goodwill
|
234,334
|
|||
|
Fair value of consideration transferred
|
$
|
2,403,060
|
||
11
Goodwill represents the excess of the preliminary estimated Merger consideration over the estimated fair value of the underlying net assets acquired.
Goodwill will not be amortized but instead will be reviewed for impairment annually, or more frequently if facts and circumstances warrant a review. Goodwill is attributable to the assembled workforce of Foot Locker, planned growth in new markets,
and synergies expected to be achieved from the combined operations of DICK’S Sporting Goods and Foot Locker. Goodwill recognized in the Merger is not expected to be deductible for tax purposes.
|
(3B)
|
Reflects the preliminary estimated fair value adjustment to property and equipment acquired in the Merger. The fair value of property and equipment is subject
to change.
|
Fair value of Property and Equipment, net:
|
(In thousands)
|
Carrying Value
as on August 2,
2025
|
Step-up / (down)
value
|
Fair value
|
|||||||||
|
Land
|
$
|
3,000
|
$
|
12,000
|
$
|
15,000
|
||||||
|
Buildings
|
9,000
|
45,000
|
54,000
|
|||||||||
|
Furniture, fixtures, equipment
|
403,000
|
(11,000
|
)
|
392,000
|
||||||||
|
Software development costs
|
59,000
|
-
|
59,000
|
|||||||||
|
Assets under finance leases
|
43,000
|
-
|
43,000
|
|||||||||
|
Alterations to leased and owned buildings
|
382,000
|
34,000
|
416,000
|
|||||||||
|
Total property, plant and equipment acquired and pro forma adjustment
|
$
|
899,000
|
$
|
80,000
|
$
|
979,000
|
||||||
|
(3C)
|
Reflects the preliminary estimated asset fair value adjustment to the identifiable intangible assets acquired, primarily consisting of tradenames and
trademarks. The fair value of intangible assets is subject to change as DICK’S Sporting Goods finalizes various estimates, inputs and analyses.
|
Fair Value of Intangible Assets:
|
(In thousands)
|
Carrying Value
as on August 2,
2025
|
Step-(down) / up
value
|
Fair value
|
|||||||||
|
Lease acquisition costs
|
$
|
1,000
|
$
|
(1,000
|
)
|
$
|
-
|
|||||
|
Trademarks & tradenames
|
226,000
|
424,000
|
650,000
|
|||||||||
|
Total identifiable intangible assets and pro forma adjustment
|
$
|
227,000
|
$
|
423,000
|
$
|
650,000
|
||||||
|
(3D)
|
Reflects one-time non-recurring transaction-related costs of approximately $62.3 million incurred prior to, or concurrent with, the closing of the Merger
including bank fees, legal fees, consulting fees, structuring & upfront fees paid for bridge loan commitments, exchange fee related to senior note exchange, costs related to Directors & Officers insurance and other transaction costs
estimated to be incurred by DICK’S Sporting Goods.
|
|
(3E)
|
Reflects a $2.0 million decrease to cash against the decrease in Long-term debt and obligations under finance leases related to the payment made to noteholders
for the bond fee associated with the exchange of the Foot Locker Notes; a $1.5 million increase to Long-term debt and obligations under finance leases against the increase in goodwill related to the reversal of outstanding deferred
financing cost balance of the Foot Locker Notes; and a $3.9 million decrease to Other assets against the increase in Goodwill related to the reversal of outstanding deferred financing cost balance of Foot Locker’s revolving credit facility.
|
|
(3F)
|
Reflects the elimination of Foot Locker’s historical equity.
|
12
|
(3G)
|
Reflects an accrual for the expected cash payment of $29.5 million for severance benefits expected to be paid within 6 to 12 months of transaction close and
the fair value of $36.4 million for the acceleration of replaced awards by executives.
|
|
(3H)
|
Reflects increase in the liabilities assumed of $6.7 million related to retention bonus for certain Foot Locker employees and associated payment at close of
the Merger.
|
|
(3I)
|
Reflects increase in the liabilities assumed of $52.3 million related to estimated seller’s transaction costs and associated payment at close of the Merger.
|
|
(3J)
|
Reflects the fair value adjustment of $22.4 million related to the Foot Locker Notes assumed and not extinguished as of the closing of the Merger.
|
|
(3K)
|
Reflects a preliminary purchase accounting adjustment of $126.0 million to record unfavorable contractual lease balance when compared to market terms. The fair
value of leases is subject to change as DICK’S Sporting Goods finalizes various estimates, inputs and analyses.
|
|
(3L)
|
Represents a $87.3 million adjustment to deferred tax liabilities primarily as a result of the pro forma adjustments for assets acquired and liabilities
assumed - specifically, relative to fair market value adjustments to assets and an adjustment to the acquired deferred tax liability for Goodwill which resets as a result of the Merger. These estimates are preliminary as adjustments to our
deferred taxes could change due to further refinement of our statutory income tax rates used to measure our deferred taxes, changes in judgment regarding realizability of assets, and changes in the estimates of the fair values of assets
acquired and liabilities assumed that may occur in conjunction with the closing of the Merger. These changes in estimates could be material.
|
|
(3M)
|
Represents the adjustment to goodwill based on the purchase price allocation, as described above.
|
|
(In thousands)
|
Amounts
|
|||
|
Goodwill resulting from the Merger
|
$
|
234,334
|
||
|
Less: Elimination of Foot Locker’s historical Goodwill
|
(655,000
|
)
|
||
|
Pro forma adjustment
|
$
|
(420,666
|
)
|
|
Note 4. Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
The adjustments included in the Unaudited Pro Forma Condensed Combined Statements of Operations for the twenty-six weeks ended August 2, 2025, and for
the year ended February 1, 2025, and are as follows:
Transaction Accounting Adjustments
|
(4A)
|
Reflects adjustment to depreciation expense, on a straight-line basis based on the preliminary fair value of Property and equipment, net and the related useful
life. Depreciation expense is split between “Cost of goods sold, including occupancy and distribution costs” and “Selling, general and administrative expenses”.
|
|
(In thousands)
|
Useful Life
|
Fair Value
|
Incremental
depreciation expense
for the twenty-six
weeks ended August
2, 2025
|
Incremental
depreciation
expense for the
year ended
February 1,
2025
|
|||||||||||
|
Land
|
n/a
|
$
|
15,000
|
$
|
-
|
n/a
|
|||||||||
|
Buildings
|
20
|
54,000
|
657
|
1,313
|
|||||||||||
|
Furniture, fixtures, equipment
|
2 - 8
|
392,000
|
69,000
|
138,000
|
|||||||||||
|
Software development costs
|
3
|
59,000
|
15,000
|
30,000
|
|||||||||||
|
Assets under finance leases
|
7 - 10
|
43,000
|
2,500
|
5,000
|
|||||||||||
|
Alterations to leased and owned buildings
|
11
|
416,000
|
17,000
|
34,000
|
|||||||||||
|
Total property and equipment acquired
|
979,000
|
104,157
|
208,313
|
||||||||||||
|
Less: Historical depreciation expense
|
(102,346
|
)
|
(197,280
|
)
|
|||||||||||
|
Pro forma adjustment for incremental depreciation expense
|
$
|
1,811
|
$
|
11,033
|
|||||||||||
13
|
(4B)
|
Reflects adjustment to amortization expense, on a straight-line basis based on the preliminary fair value of Intangible assets, net and the related useful
life.
|
|
(In thousands)
|
Useful Life
|
Fair Value
|
Amortization
expense for the
twenty-six weeks
ended August 2,
2025
|
Amortization
expense for the
year ended
February 1, 2025
|
|||||||||||
|
Trademarks & tradenames
|
n/a
|
$
|
650,000
|
-
|
-
|
||||||||||
|
Total identifiable intangible assets
|
650,000
|
-
|
-
|
||||||||||||
|
Less: Historical Amortization expense
|
-
|
5,000
|
|||||||||||||
|
Pro forma adjustment for incremental amortization expense
|
$
|
-
|
$
|
(5,000
|
)
|
||||||||||
|
(4C)
|
Reflects estimated non-recurring transaction-related expenses of $62.3 million incurred by DICK’S Sporting Goods, including legal, accounting and regulatory
fees directly associated with the Merger. Out of these expenses, $59.0 million are charged under Merger and integration costs and $3.4 million pertaining to structuring & upfront fee on bridge loan commitments are charged as Interest
expense. These non-recurring expenses are not anticipated to affect the Unaudited Pro Forma Condensed Combined Statement of Operations beyond twelve months after the closing date.
|
|
(4D)
|
Represents the adjustment to record the elimination of Foot Locker’s historical stock-based compensation expense and recognition of new stock-based
compensation expense for the post-combination portion of the Foot Locker RSU Awards and Foot Locker PSU Awards that are expected to be replaced by DICK’S Sporting Goods RSUs, respectively, at the closing of the Merger.
|
|
(In thousands)
|
For the twenty-six
weeks ended August
2, 2025
|
For the Year Ended
February 1, 2025
|
||||||
|
Post-combination stock-based compensation expense
|
$
|
6,560
|
$
|
14,932
|
||||
|
Less: Historical stock-based compensation expense
|
(6,371
|
)
|
(10,969
|
)
|
||||
|
Pro forma adjustment
|
$
|
189
|
$
|
3,963
|
||||
|
(4E)
|
Represents the adjustment to DICK’S Sporting Goods selling, general and administrative expenses to record a one-time post-combination expense related to paid
severance costs of $65.9 million for executives of Foot Locker, including cash severance and the acceleration of unvested Foot Locker RSU Awards and Foot Locker PSU Awards held by executives.
|
|
(4F)
|
The adjustment represents $6.7 million of additional cash retention bonus to certain employees of Foot Locker that remain employed six months after the closing
of the Merger.
|
|
(4G)
|
Reflects the adjustment to record amortization of exchange fee of $0.2 million and $0.5 million out of the total of $2.0 million, incurred on the same for the
twenty-six weeks ended August 2, 2025, and for the year ended February 1, 2025, respectively.
|
|
(4H)
|
Reflects the adjustment to record interest expense for accretion of the preliminary fair value of the Foot Locker Notes assumed and not extinguished as of the
closing of the Merger. In addition, this also reflects the reversal of historical amortization of transaction fees related to both the Foot Locker Notes and Foot Locker’s revolving credit facility, recorded in the income statement of Foot
Locker for the twenty-six weeks ended August 2, 2025, and for the year ended February 1, 2025, respectively.
|
14
|
(4I)
|
Reflects estimated income tax impact of $4.1 million and $(8.8) million related to the Transaction Accounting Adjustments for the twenty-six weeks ended
August 2, 2025, and for the year ended February 1, 2025, respectively. Tax-related adjustments are based upon an estimated statutory tax rate of 26%. The estimated blended statutory tax rate used for the unaudited pro forma condensed
combined financial information will likely vary from the actual effective tax rates in periods as of and subsequent to the completion of the Merger.
|
|
(4J)
|
Represents an adjustment of $19.7 million and $39.5 million to reverse amortization expense for unfavorable contractual lease term when compared to market
for the twenty-six weeks ended August 2, 2025, and for the year ended February 1, 2025, respectively. The fair value of leases is subject to change as DICK’S Sporting Goods finalizes various estimates, inputs and analyses.
|
|
(4K)
|
Represents the recognition of one-time gain associated with DICK’S Sporting Goods investment in Foot Locker reflected in the Unaudited Pro Forma Condensed
Combined Statement of Operations for the year end February 1, 2025.
|
Note 5. Earnings Per Share
The following tables set forth the computation of pro forma basic and diluted earnings per share for the year ended February 1, 2025, and twenty-six
weeks ended August 2, 2025.
|
(in thousands, except per share data)
|
||||||||
|
Numerator (basic and diluted):
|
For the year
ended February
1, 2025
|
For the twenty-six
weeks ended
August 2, 2025 |
||||||
|
Pro forma net income attributable to common shares
|
$
|
1,083,476
|
$
|
256,315
|
||||
|
Denominator:
|
||||||||
|
Weighted-average number of common shares outstanding - basic
|
90,050
|
88,826
|
||||||
|
Weighted-average number of common shares outstanding - diluted
|
92,652
|
91,017
|
||||||
|
Pro forma earnings per share:
|
||||||||
|
Basic
|
$
|
12.03
|
$
|
2.89
|
||||
|
Diluted
|
$
|
11.69
|
$
|
2.82
|
||||
|
(in thousands)
|
For the year
ended February
1, 2025
|
For the twenty-six
weeks ended
August 2, 2025
|
||||||
|
Denominator for Basic
|
||||||||
|
Historical weighted-average number of common shares outstanding
|
80,468
|
79,244
|
||||||
|
Shares of DICK’S Sporting Goods common stock issued as consideration transferred
|
9,582
|
9,582
|
||||||
|
Total weighted average common shares outstanding (basic)
|
90,050
|
88,826
|
||||||
|
Denominator for Diluted
|
||||||||
|
Historical weighted-average number of common shares outstanding
|
82,929
|
81,259
|
||||||
|
Shares of DICK’S Sporting Goods common stock issued as consideration transferred
|
9,582
|
9,582
|
||||||
|
Replacement of Foot Locker's employee PSU and RSU awards
|
141
|
176
|
||||||
|
Total weighted average common shares outstanding (diluted)
|
92,652
|
91,017
|
||||||
15