8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 29, 2004

Commission File No. 001-31463

DICK’S SPORTING GOODS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	16-1241537 (I.R.S. Employer Identification No.)
300 Industry Drive, RIDC Park West,	15275
Pittsburgh, Pennsylvania (Address of principal executive offices)	(Zip Code)

(724) 273-3400

(Registrant’s telephone number, including area code)

Former name or former address, if changed since last report:

200 Industry Drive, RIDC Park West,
Pittsburgh, Pennsylvania 15275

Dick’s Sporting Goods, Inc. hereby files Amendment No. 1 to its current report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2004.

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TABLE OF CONTENTS

ITEM 2.01. ACQUISITION OR DISPOSAL OF ASSETS	3
ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS	3
SIGNATURE	4
EXHIBIT INDEX	5
Consent
Exhibit 99.1
Exhibit 99.2
Exhibit 99.3

2

ITEM 2.01. ACQUISITION OR DISPOSITION OF ASSETS

On July 29, 2004, Dick’s Sporting Goods, Inc. (“Dick’s”) acquired all of the common stock of Galyan’s Trading Company, Inc. (“Galyan’s”) for $16.75 per share in cash, and Galyan’s became a wholly owned subsidiary of Dick’s as previously reported by Dick’s on a Current Report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2004. Dick’s paid $362.1 million to fund and consummate the Galyan’s acquisition, including the repayment of $57.2 million of Galyan’s indebtedness.

Unless otherwise specified, the terms “Galyan’s,” “we,” “us,” “the Company,” and “our” contained in Exhibits 99.1 and 99.2 refer to Galyan’s Trading Company, Inc. and its wholly owned subsidiaries.

ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

(A) Financial statements of businesses acquired. The financial statements of Galyan’s Trading Company, Inc. are attached hereto as Exhibits 99.1 and 99.2.

(B) Pro forma financial information. The pro forma financial information is attached hereto as Exhibit 99.3.

(C) Exhibits. The following materials are filed as exhibits to this current report on Form 8-K/A.

Exhibit No.	Description
23.1	Consent of Deloitte & Touche LLP
99.1	Audited balance sheet of Galyan’s Trading Company, Inc. as of January 31, 2004 and February 1, 2003 and the statements of operations, shareholder’s equity and cash flows for the years ended January 31, 2004, February 1, 2003 and February 2, 2002.
99.2	Unaudited balance sheet of Galyan’s Trading Company, Inc. as of May 1, 2004 and the statements of operations and cash flows for the 13 weeks ended May 1, 2004 and May 3, 2003.
99.3	Unaudited pro forma financial information.

3

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.

	DICK’S SPORTING GOODS, INC.
Date: October 12, 2004	By: /S/ MICHAEL F. HINES
	Name:  Michael F. Hines
	Title:    EVP - Chief Financial Officer

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EXHIBIT INDEX

Exhibit
Number	Exhibit Title	Method of Filing
23.1	Consent of Deloitte & Touche LLP	Filed herewith
99.1	Audited balance sheet of Galyan’s Trading Company, Inc. as of January 31, 2004 and February 1, 2003 and the statements of operations, shareholder’s equity and cash flows for the years ended January 31, 2004, February 1, 2003 and February 2, 2002.	Filed herewith
99.2	Unaudited balance sheet of Galyan’s Trading Company, Inc. as of May 1, 2004 and the statements of operations and cash flows for the 13 weeks ended May 1, 2004 and May 3, 2003.	Filed herewith
99.3	Unaudited pro forma financial information.	Filed herewith

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-114749, as amended) and Form S-8 (Nos. 333-100656 and 333-102385, as amended) of Dick’s Sporting Goods, Inc. of our report dated March 31, 2004 (July 29, 2004 with respect to Note 15) relating to the consolidated financial statements of Galyan’s Trading Company, Inc. as of January 31, 2004 and February 1, 2003, and for each of the three fiscal years in the period ended January 31, 2004 (which report expressed an unqualified opinion and includes an explanatory paragraph relating to changes in the method of accounting for goodwill and the method of accounting for cash consideration received from vendors) appearing in Exhibit 99.1 of this Form 8-K/A dated July 29, 2004.

/s/ DELOITTE & TOUCHE
October 12, 2004
Indianapolis, Indiana

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EX-99.1

Exhibit 99.1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of
Galyan’s Trading Company, Inc.
Plainfield, Indiana

We have audited the accompanying consolidated balance sheets of Galyan’s Trading Company, Inc. and its subsidiaries (the “Company”) as of January 31, 2004 and February 1, 2003, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the three fiscal years in the period ended January 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of Galyan’s Trading Company, Inc. and subsidiaries as of January 31, 2004 and February 1, 2003, and the results of their operations and their cash flows for each of the three fiscal years in the period ended January 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, effective February 3, 2002, the Company changed its method of accounting for goodwill, and effective January 1, 2003, changed its method of accounting for cash consideration received from vendors, as required by new accounting standards.

/s/ DELOITTE & TOUCHE
March 31, 2004
(July 29, 2004 with respect to Note 15)
Indianapolis, Indiana

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Galyan’s Trading Company, Inc.
Consolidated Balance Sheets
As of January 31, 2004 and February 1, 2003
(dollars in thousands, except share data)

	Fiscal Year
	2003			2002
Assets
Current assets:
Cash and cash equivalents	$	7,120		$	11,890
Receivables, net		10,861			7,726
Merchandise inventories		155,661			138,993
Deferred income taxes		3,980			1,969
Other current assets		9,425			5,010
Total current assets		187,047			165,588
Property and equipment, net		186,450			136,421
Goodwill, net		18,334			18,334
Other assets, net		2,414			878
Total assets	$	394,245		$	321,221
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	71,567		$	56,804
Accrued expenses		40,428			42,579
Current portion of long-term debt		137			6,103
Total current liabilities		112,132			105,486
Long-term liabilities:
Debt, net of current portion		49,578			186
Deferred income taxes		10,244			1,334
Other long-term liabilities		8,808			6,938
Total long-term liabilities		68,630			8,458
Commitments and contingencies		—			—
Shareholders’ equity:
Preferred stock, no par value 5,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock and paid-in capital, no par value 50,000,000 shares authorized, 17,362,368 and 17,084,716 shares issued and outstanding, respectively		194,888			191,802
Notes receivable from shareholders		(689	)		(948	)
Unearned compensation		(857	)		(115	)
Warrants		1,461			1,461
Retained earnings		18,680			15,077
Total shareholders’ equity		213,483			207,277
Total liabilities and shareholders’ equity	$	394,245		$	321,221

The accompanying notes are an integral part of these consolidated financial statements.

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Galyan’s Trading Company, Inc.
Consolidated Statements of Operations
For the Fiscal Years Ended January 31, 2004, February 1, 2003 and February 2, 2002
(dollars in thousands, except per share data)

	Fiscal Year
	2003			2002			2001
Net sales	$	690,701		$	597,745		$	482,528
Cost of sales		500,334			416,230			337,953
Gross profit		190,367			181,515			144,575
Selling, general and administrative expenses		180,476			148,357			118,070
Operating income		9,891			33,158			26,505
Interest expense		2,856			2,053			7,095
Interest income		(162	)		(257	)		(372	)
Loss on early extinguishment of debt		—			—			10,435
Income before income tax expense		7,197			31,362			9,347
Income tax expense		3,594			12,642			4,715
Net income	$	3,603		$	18,720		$	4,632
Basic earnings per share	$	0.21		$	1.10		$	0.32
Diluted earnings per share	$	0.21		$	1.09		$	0.32

The accompanying notes are an integral part of these consolidated financial statements.

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Galyan’s Trading Company, Inc.
Consolidated Statements of Shareholders’ Equity
For the Fiscal Years Ended January 31, 2004, February 1, 2003 and February 2, 2002
(dollars in thousands, except share data)

	Common Stock				Notes Receivable									Retained
			Paid-in		from			Unearned						Earnings
	Shares		Capital		Shareholders			Compensation			Warrants			(Deficit)			Total
Balance, February 3, 2001		9,763,707	$	70,596	$	(1,491	)	$	(445	)	$	8,654		$	(8,275	)	$	69,039
Issuance of common stock, net of issuance costs of $11,548		6,550,001		112,797		(285	)		—			—			—			112,512
Exercise of stock warrants		720,000		7,200		—			—			(7,193	)		—			7
Stock compensation expense		—		—		—			165			—			—			165
Payments on notes receivable from shareholders		—		—		325			—			—			—			325
Service contributed from Limited Brands		—		541		—			—			—			—			541
Net income		—		—		—			—			—			4,632			4,632
Balance, February 2, 2002		17,033,708		191,134		(1,451	)		(280	)		1,461			(3,643	)		187,221
Issuance of common stock		20,800		208		—			—			—			—			208
Employee stock purchase plan		30,208		257		—			—			—			—			257
Issuance of stock options		—		203		—			—			—			—			203
Stock compensation expense		—		—		—			165			—			—			165
Payments on notes receivable from shareholders		—		—		503			—			—			—			503
Net income		—		—		—			—			—			18,720			18,720
Balance, February 1, 2003		17,084,716		191,802		(948	)		(115	)		1,461			15,077			207,277
Issuance of common stock		133,168		1,514		—			—			—			—			1,514
Employee stock purchase plan		44,484		429		—			—			—			—			429
Issuance of restricted stock		100,000		1,143		—			(1,143	)		—			—			—
Stock compensation expense		—		—		—			401			—			—			401
Payments on notes receivable from shareholders		—		—		259			—			—			—			259
Net income		—		—		—			—			—			3,603			3,603
Balance, January 31, 2004		17,362,368	$	194,888	$	(689	)	$	(857	)	$	1,461		$	18,680		$	213,483

The accompanying notes are an integral part of these consolidated financial statements.

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Galyan’s Trading Company, Inc.
Consolidated Statements of Cash Flows
For the Fiscal Years Ended January 31, 2004, February 1, 2003 and February 2, 2002
(dollars in thousands)

	Fiscal Year
	2003			2002			2001
Cash flows from operating activities:
Net income	$	3,603		$	18,720		$	4,632
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		24,916			17,537			13,749
Amortization of financing intangible and discount on subordinated notes to Freeman Spogli and Limited Brands		526			535			1,222
Loss on early extinguishment of debt		—			—			10,435
Deferred income taxes		6,899			2,255			1,258
Interest converted to subordinated debt		—			—			3,647
(Gain) loss on disposal of property and equipment		(676	)		223			282
Deferred rent and other non-cash expense		2,271			2,136			2,651
Changes in certain assets and liabilities:
Accounts receivable		389			(608	)		(648	)
Merchandise inventories		(16,668	)		(27,178	)		(20,320	)
Other assets		(4,407	)		1,561			(3,574	)
Accounts payable and accrued expenses		17,928			30,616			10,046
Net cash provided by operating activities		34,781			45,797			23,380
Cash flows from investing activities:
Capital expenditures		(77,113	)		(59,453	)		(37,252	)
(Decrease) increase in net accounts payable for capital expenditures		(6,879	)		(7,181	)		10,701
Proceeds from insurance settlement		1,225			—			—
Net cash used in investing activities		(82,767	)		(66,634	)		(26,551	)
Cash flows from financing activities:
Net borrowings (payments) on revolving line of credit		37,825			—			(19,950	)
Financing proceeds from sale leaseback transaction		11,685			—			—
Payments of financing costs		(2,226	)		—			(1,467	)
Proceeds from long-term debt		—			350			5,650
Principal payments on long-term debt and other obligations		(6,084	)		(5,361	)		(60,892	)
Payments on notes receivable from shareholders		259			503			325
Proceeds from sale of common stock		1,757			465			124,067
Transaction costs for initial public offering		—			—			(11,548	)
Net cash provided by (used in) financing activities		43,216			(4,043	)		36,185
Net (decrease) increase in cash and cash equivalents		(4,770	)		(24,880	)		33,014
Cash and cash equivalents, beginning of year		11,890			36,770			3,756
Cash and cash equivalents, end of year	$	7,120		$	11,890		$	36,770

The accompanying notes are an integral part of these consolidated financial statements.

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GALYAN’S TRADING COMPANY, INC.

Notes to Consolidated Financial Statements

For the Fiscal Years Ended January 31, 2004, February 1, 2003 and February 2, 2002

1. Organization and Summary of Significant Accounting Policies

Organization

Galyan’s Trading Company, Inc. (the “Company”), an Indiana corporation, is a specialty retailer that offers a broad range of outdoor and athletic equipment, apparel, footwear and accessories, as well as casual apparel and footwear. Our store format and our merchandising strategy are targeted to appeal to consumers with active lifestyles, from the casual consumer to the serious sports enthusiast. As of January 31, 2004 we operated 43 stores in 19 states and one clearance center. The clearance center location is not included in our store count as it is not part of our long-term strategy.

On July 2, 2001, the Company completed an initial public offering of 6,500,000 shares of common stock at $19.00 per share. The Company received approximately $112.0 million in net proceeds from the offering. Prior to the initial public offering, the Company’s shareholders were FS Equity Partners IV, L.P. (“Freeman Spogli”), a fund managed by Freeman Spogli & Co. LLC; G Trademark, Inc. (“G Trademark”), a wholly owned subsidiary of Limited Brands, Inc. (“Limited Brands”); Benchmark Capital Partners IV, L.P. (“Benchmark”); management and directors. From July 1995 until August 1999, the Company was a wholly owned subsidiary of Limited Brands.

Fiscal Year

Our fiscal year ends on the Saturday closest to January 31. Fiscal years ended January 31, 2004, February 1, 2003 and February 2, 2002 are referred to as fiscal 2003, 2002 and 2001, respectively. All years presented include 52 weeks.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Galyan’s Nevada, Inc. (“Nevada”) and Galyan’s of Virginia, Inc. (“Virginia”). Virginia was incorporated in fiscal 2002 to centralize the ownership and administration of gift certificate and gift card liabilities. Nevada was incorporated during fiscal 2000 to centralize the ownership, management and protection of all intellectual property of the Company. All significant intercompany accounts and transactions have been eliminated.

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Cash and Cash Equivalents

We consider all short-term investments with an original maturity of three months or less to be cash equivalents.

Inventories

Merchandise inventories are stated at the lower of cost or market, on a first-in, first-out basis, utilizing the retail method.

Property and Equipment

Property and equipment is stated at cost. Depreciation and amortization of property and equipment is computed on a straight-line basis over the estimated useful lives of the related assets, which range from 10 to 30 years for buildings and leasehold improvements and 4 to 10 years for furniture, fixtures and store equipment. Leasehold improvements are amortized over the shorter of the estimated useful life or the term of the lease. Routine repairs and maintenance are charged to expense as incurred. The cost of assets sold or retired and the related accumulated depreciation are removed from the accounts, with any resulting gain or loss included in net income.

Goodwill

The Company applies the provisions of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, to account for goodwill. Our goodwill has an indefinite useful life. Goodwill is reviewed for impairment on an annual basis, or more often if events or circumstances change that could cause goodwill to become impaired. No impairment was recognized upon adoption or as a result of the annual impairment tests as of January 31, 2004 and February 1, 2003. Prior to fiscal 2002, goodwill was amortized on a straight-line basis over 30 years. Amortization expense of goodwill for fiscal 2001 was $783,000. The following represents a reconciliation of reported net income to pro forma income excluding the effect of amortization expense:

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	Fiscal Year
	2003		2002		2001
Reported net income	$	3,603	$	18,720	$	4,632
Add back: Goodwill amortization		—		—		783
Pro forma net income	$	3,603	$	18,720	$	5,415
Basic earnings per share:
Reported net income	$	0.21	$	1.10	$	0.32
Goodwill amortization		—		—		0.06
Pro forma net income	$	0.21	$	1.10	$	0.38
Diluted earnings per share:
Reported net income	$	0.21	$	1.09	$	0.32
Goodwill amortization		—		—		0.05
Pro forma net income	$	0.21	$	1.09	$	0.37

Other Assets

Other assets include deferred financing costs that are being amortized over the terms of the related debt agreements, which range from 5 to 20 years.

Long-lived Assets

Long-lived assets, primarily building and leasehold improvements, are reviewed for impairment whenever events or changes in circumstances indicate that full recoverability is questionable. Factors used in the evaluation include, but are not limited to, management’s plans for future operations, recent operating results and projected cash flows. Impaired assets are written down to estimated fair value with fair value generally being determined based on discounted expected future cash flows. No impairment charges were recorded during fiscal 2003, 2002 and 2001, respectively.

Revenue Recognition

We recognize retail sales upon the purchase of merchandise by the customer, net of returns and allowances, which are based upon historical customer returns experience. Markdowns associated with the preferred customer programs are recognized upon redemption in conjunction with a qualifying purchase. Revenue from the sale of gift cards and store credits is recognized upon redemption of the gift cards or store credits by the customer. Revenue from layaway sales is recognized upon receipt of final payment from the customer. As of February 2, 2002, we no longer permitted customers to use layaway sales to purchase merchandise.

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Cost of Sales

Cost of sales includes the cost of merchandise, inventory markdowns, inventory shrinkage, inbound freight, distribution and warehousing, payroll for buying personnel, and store occupancy costs. Store occupancy costs include rent, contingent rents, common area maintenance, real estate and personal property taxes, utilities, and repairs and maintenance.

Advertising Expense

Advertising costs are expensed in the period in which the advertising occurs. The Company participates in various advertising and marketing cooperative programs with its vendors, who, under these programs, reimburse the Company for certain costs incurred. Advertising expense, net of vendor reimbursement, for fiscal 2003, 2002 and 2001 was $25.5 million, $17.8 million and $12.2 million, respectively.

On an annual basis, we enter into cooperative advertising agreements with certain vendors. In accordance with Emerging Issues Task Force 02-16, Accounting by a Reseller for Cash Consideration Received from a Vendor, for fiscal 2003, amounts received from vendors that represented a reimbursement of specific, identifiable costs incurred for that vendor were recorded as a reduction to advertising expense in the period the related expense was incurred. Other amounts received from vendors were recorded as an adjustment to inventory cost and recognized as a reduction of cost of goods sold as the merchandise was sold. The adoption of EITF 02-16 increased advertising expense by approximately $4.2 million for fiscal 2003. Prior to fiscal 2003, all funds received from vendors for cooperative advertising were recorded as a reduction to advertising expense.

Pre-Opening Costs

Non-capital expenditures, such as payroll, store set-up costs, training of new store employees and travel, incurred prior to the opening of a new store are charged to expense in the period they are incurred. Pre-opening costs for fiscal 2003, 2002 and 2001 were $5.0 million, $4.9 million and $2.8 million, respectively.

Earnings Per Share

Earnings per share of common stock is based on the weighted average number of shares outstanding during the year. The following table presents a reconciliation of our basic and diluted weighted average common shares as required by Statement of Financial Accounting Standards (“SFAS”) No. 128, Earnings Per Share:

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	Fiscal Year
	2003		2002		2001
Basic earnings per share:
Weighted average common shares		17,170,173		17,044,902		14,445,401
Diluted earnings per share:
Weighted average common shares		17,170,173		17,044,902		14,445,401
Dilutive effect of stock options and warrants		117,178		133,440		243,399
Weighted average common and incremental shares		17,287,351		17,178,342		14,688,800

Options to purchase 1,298,010, 1,138,300 and 773,500 shares of common stock were outstanding at the end of fiscal 2003, 2002 and 2001, respectively, but were not included in the computation of diluted shares because the options’ exercise prices were greater than the fair value. In addition, a warrant to purchase 1,350,000 shares of common stock was outstanding at the end of fiscal 2003, 2002 and 2001, but was not included in the computation of diluted shares because the warrant’s exercise price was greater than fair value.

Stock Compensation

In accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 148 Accounting for Stock-Based Compensation – Transition and Disclosure, which amends SFAS No. 123, Accounting for Stock-Based Compensation, we will continue to account for stock-based employee compensation under the provisions of APB Opinion No. 25 and related interpretations. The following illustrates the pro forma effect on net income and earnings per share if we had applied the fair value recognition provisions of SFAS No. 123:

Pro Forma:

	Fiscal Year
	2003			2002			2001
	(dollars in thousands, except per share data)
Net income as reported	$	3,603		$	18,720		$	4,632
Add: Stock-based compensation expense included in reported net income, net of related tax effects		69			221			99
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects		(1,551	)		(1,688	)		(531	)
Pro forma net income	$	2,121		$	17,253		$	4,200
Earnings per share:
Basic, as reported	$	0.21		$	1.10		$	0.32
Basic, pro forma	$	0.12		$	1.01		$	0.29
Diluted, as reported	$	0.21		$	1.09		$	0.32
Diluted, pro forma	$	0.12		$	1.00		$	0.29

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The pro forma amounts are not representative of the effects on reported earnings for future years.

The weighted average fair value of options granted for fiscal 2003, 2002 and 2001 were $6.30, $8.37 and $5.10, respectively. The weighted average fair values of the options calculated in accordance with SFAS 123 were determined using a Black-Scholes option-pricing model with the following weighted average assumptions:

	Fiscal Year
							Subsequent to			Prior to initial
							initial public offering			public offering
	2003			2002			2001			2001
Expected dividend yield		0	%		0	%		0	%		0	%
Expected stock price volatility		63	%		62	%		60	%		0	%
Risk-free interest rate range		1.94% - 3.13	%		2.63% - 4.28	%		3.38% - 4.68	%		4.58% - 4.65	%
Expected life of options		4			4			3			3

Segment Information

We are a specialty retailer with 43 stores that offers a broad range of outdoor and athletic equipment, apparel, footwear and accessories, as well as casual apparel and footwear. Our store format and our merchandising strategy are targeted to appeal to consumers with active lifestyles, from the casual consumer to the serious sports enthusiast. Given the economic characteristics of the store formats, the similar nature of the products sold, and the type of customer and method of distribution, our operations are aggregated into one segment.

Accounting Estimates

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 may differ from those estimates.

Reclassifications

Certain amounts in the fiscal 2002 and 2001 consolidated financial statements have been reclassified to conform to the fiscal 2003 presentation.

New Accounting Pronouncements

On January 1, 2003, we adopted Emerging Issues Task Force (“EITF”) 02-16, Accounting by a Reseller for Cash Consideration Received from a Vendor. This EITF addresses the classification of

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cash consideration received from vendors in a reseller’s consolidated financial statements. The guidance related to income statement classification is to be applied in annual and interim financial statements for agreements entered into, or modifications of existing agreements, after January 1, 2003. The consensus of the EITF established an overall presumption that cash received from vendors is a reduction in the price of vendor’s products and should be recognized accordingly as a reduction in cost of sales at the time the related inventory is sold. Some consideration could be characterized as a reduction of expense if the cash received represents a reimbursement of specific, incremental, identifiable costs incurred by the retailer to sell the vendor’s products. For fiscal 2003, the adoption of this statement decreased our operating income by $1,106,000 ($664,000 net of income taxes or $0.04 per share on a fully diluted basis). For fiscal 2002, the adoption of this statement did not have a significant effect on our financial statements.

On February 2, 2003, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting of obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The adoption of this statement did not have an effect on the consolidated financial statements.

On February 2, 2003, we adopted the recognition and measurement provisions of Financial Accounting Standards Board Interpretation No. 45 (“FIN No. 45”) Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others an interpretation of SFAS No. 5, 57, and 107 and the rescission of FASB Interpretation No. 34, was issued. FIN No. 45 clarifies the requirements of SFAS No. 5, Accounting for Contingencies, relating to a guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The disclosure requirements in this interpretation were adopted in fiscal 2002. We had no guarantees that were required to be disclosed in the consolidated financial statements. The adoption of this statement did not have an effect on the consolidated financial statements.

On February 2, 2003 we adopted SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections, which, among other things, changes the way gains and losses from the extinguishment of debt are reported. Previously, all gains and losses from the extinguishment of debt were required to be reported as an extraordinary item, net of related tax effect. Under SFAS No.145, gains and losses from the extinguishment of debt should be reported as part of on-going operations, unless the extinguishment of debt meets the criteria of both unusual and infrequent as established in APB No. 30. SFAS No. 145 is effective for us beginning February 2, 2003, including all prior period presentations. The loss on early extinguishment of debt has been reclassified in the comparative consolidated financial statements to be included within earnings before income taxes.

On June 1, 2003, we adopted SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS 150 establishes standards on the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The provisions of SFAS 150 are effective for financial instruments entered into or modified after May 31, 2003 and to all instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. The adoption of this statement did not have an effect on the consolidated financial statements.

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2. Receivables

Receivables consist of the following (in thousands):

	Fiscal Year
	2003			2002
Construction contribution receivables	$	9,634		$	6,110
Third party financing receivables		—			578
Other		1,415			1,119
Total receivables		11,049			7,807
Less allowance for doubtful accounts		(188	)		(81	)
Receivables, net	$	10,861		$	7,726

3. Property and Equipment

Property and equipment consists of the following (in thousands):

	Fiscal Year
	2003			2002
Land	$	2,219		$	—
Building and leasehold improvements		132,881			88,371
Furniture, fixtures and equipment		135,765			102,157
Construction in progress		1,792			8,128
Total property and equipment		272,657			198,656
Less accumulated depreciation and amortization		(86,207	)		(62,235	)
Property and equipment, net	$	186,450		$	136,421

Depreciation and amortization expense for fiscal 2003, 2002 and 2001 was $24,760,000 $17,381,000 and $12,966,000, respectively.

In fiscal 2003 we received final insurance proceeds of $1,225,000, which resulted in a gain of $1,038,000 that is included in selling, general and administrative expense, related to our prior Greenwood, Indiana store location that was destroyed by a tornado in September 2002. In fiscal 2002, selling, general and administrative expenses included the write off of all of our leasehold improvements and certain furniture, fixtures and equipment with a carrying value of $130,000 as a result of the tornado that destroyed our Greenwood, Indiana store location.

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4. Other Assets

Other assets consist of the following (in thousands):

	Fiscal Year
	2003			2002
Deferred financing costs	$	3,768		$	1,610
Other		467			476
Total other assets		4,235			2,086
Less accumulated amortization		(1,821	)		(1,208	)
Total other assets, net	$	2,414		$	878

Amortization expense of deferred financing costs and other assets for fiscal 2003, 2002 and 2001 was $613,000, $691,000 and $1,060,000, respectively.

5. Accrued Expenses

Accrued expenses consist of the following (in thousands):

	Fiscal Year
	2003		2002
Accrued payroll, withholdings and benefits	$	8,087	$	8,466
Gift cards, gift certificates and store credits		15,299		12,582
Income taxes payable		—		9,322
Real and personal property taxes		5,643		3,712
Other		11,399		8,497
Total accrued expenses	$	40,428	$	42,579

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6. Long-Term Debt

Long-term debt consists of the following (in thousands):

	Fiscal Year
	2003			2002
Bank and other:
Revolving line of credit	$	37,825		$	—
Financing obligations		11,685
Construction loan		—			6,000
Capital lease obligations		205			289
Total long-term debt		49,715			6,289
Less current maturities		(137	)		(6,103	)
Total long-term debt, net of current maturities	$	49,578		$	186

Revolving Line of Credit

On April 25, 2003, we entered into an amended and restated credit agreement with JPMorgan Chase Bank, as administrative agent, for the syndication of participating banks, which matures on April 24, 2008. Under this agreement, our revolving credit facility maximum borrowing capacity is $250.0 million of which $30.0 million may be used for the issuance of letters of credit. The revolving credit facility is an asset-based loan with a borrowing base calculated on certain percentages of eligible inventory, eligible accounts receivables, and certain real property as defined in the agreement. The revolving credit facility bears interest, at our election, at either an adjusted prime rate or an adjusted LIBOR, in each case plus additional interest, which varies depending on our availability level or EBITDA measured at each quarter end. Availability is defined as the lesser of the monthly borrowing base or $250.0 million; minus the total borrowings, including letters of credit. We pay an annual commitment fee on the unused portions of the revolving credit facility at a variable amount based on utilization of the total facility. As of January 31, 2004, the commitment fee rate was 0.425%. We will not be subject to any financial covenants, provided we maintain a minimum of $35.0 million of availability. The revolving credit facility contains other covenants, including covenants that restrict our ability to incur indebtedness or to create various liens, and restrict our ability to engage in mergers or acquisitions, sell assets, or make junior payments, including cash dividends. As of January 31, 2004, we were in compliance with all applicable covenants. The revolving credit facility is secured by a first priority security interest in our cash, inventory, intellectual property, and certain real estate that is included in the borrowing base. Our subsidiaries have guaranteed, and any future subsidiaries will be required to guarantee, our obligations under the revolving credit facility. As of January 31, 2004, we had $37.8 million in outstanding borrowings and an availability of $58.5 million, net of $5.0 million used in support of letters of credit, under our revolving credit facility.

In fiscal 2001 we incurred a loss of $2,620,000 to expense the remaining deferred financing cost associated with the previous revolving credit facility.

Financing Obligations

On August 8, 2003 we sold our interest in buildings and leasehold improvements for two store locations, for approximately $12.0 million to CPA®:15, which is a member of the W.P. Carey Group and simultaneously entered into lease agreements for these two store locations. The

21

transaction included our store locations in Buffalo, New York, and Greenwood, Indiana. Although we leased back the properties, this transaction was accounted for as a financing obligation, with the future lease payments classified as a liability in our financial statements and quarterly lease payments classified as payments of principal and interest expense relating to a financing obligation. The net proceeds from this transaction were used to repay current borrowings under our revolving credit facility. As of January 31, 2004, we had an outstanding obligation of $11.7 million, with a fixed interest rate of 10.6% that matures in 2024. Simultaneously, we assigned our rights under an existing ground lease to CPA®:15, which is a member of the W.P. Carey Group, for a third store in Freehold, New Jersey that had not yet been constructed and is scheduled to open in the summer of 2004.

Construction Loans

During fiscal 2001, we entered into a $6.0 million line of credit agreement with a bank to be used for the construction of a new store building. On May 1, 2003, we paid all remaining outstanding principal and interest on this loan.

Subordinated and Junior Subordinated Notes

During fiscal 1999, we entered into a security purchase agreement to issue $25.0 million of subordinated notes and $25.0 million of junior subordinated notes. In connection with the issuance of the subordinated and junior subordinated notes, we issued warrants to purchase 720,000 shares of common stock, which were exercised in fiscal 2001. The fair value of the warrants was recorded as an increase to shareholders’ equity and as a reduction to the related subordinated notes. The debt discount was amortized using the effective interest method into interest expense over the term of the subordinated and junior subordinated notes. Debt discount of $162,000 was amortized as interest expense during fiscal 2001.

The subordinated and junior subordinated notes required semi-annual interest payments. Under the terms of the agreement, we could increase the principal amount of the subordinated and junior subordinated notes in lieu of making the interest payments. We elected, in lieu of making the interest payments, to increase the principal by $3,647,000 during fiscal 2001.

During fiscal 2001, we paid all the outstanding principal and interest due under the subordinated and junior subordinated notes. We incurred a loss of $7,815,000 to expense the remaining unamortized discount and deferred financing costs associated with these notes.

Future minimum principal payments on long-term debt as of January 31, 2004 are as follows (in thousands):

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Fiscal Year
2004	$	137
2005		111
2006		99
2007		58
2008		37,923
2009 and Thereafter		11,387
Total payments	$	49,715

7. Shareholders’ Equity

On July 2, 2001, we consummated our initial public offering of 6,500,000 shares of common shares at $19.00 per share. Immediately prior to the initial public offering, our articles of incorporation were amended to combine all classes of common stock into one single class and to authorize the issuance of up to 50,000,000 shares of common stock. All Class A common stock automatically converted into the same number of shares of common stock. In addition, all securities convertible or exercisable into shares of Class A common stock or Class B common stock automatically became convertible or exercisable into the same number of shares of common stock. As of January 31, 2004, we had 17,362,368 shares issued and outstanding and 2,501,337 shares reserved for future issuance.

Stock Subscription Plan

We maintain a stock subscription plan that provides for the issuance and sale of shares of common stock to certain directors, officers, employees and consultants. The maximum number of shares that may be issued under this plan is 1,000,000. No common stock was issued or repurchased under the stock subscription plan during fiscal 2003 or fiscal 2002. Common stock issued under the stock subscription plan for fiscal 2001 is as follows:

	Number of		Weighted		Weighted
	Shares		Average Issue		Average Fair
	Outstanding		Price		Value
Outstanding shares, February 3, 2001		578,360
Shares issued		40,000	$	18.63	$	18.63
Outstanding shares, February 2, 2002, February 1, 2003 and January 31, 2004		618,360

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In connection with the stock subscription plan, certain directors, officers, employees and consultants entered into stock pledge agreements. The agreements require annual payments of interest at 7.5% and expire in October, 2004. Shareholder notes receivable relating to the pledge agreements were $689,000 and $948,000, at January 31, 2004 and February 1, 2003, respectively.

Restricted Stock

During fiscal 2003, we granted 100,000 restricted shares of unregistered common stock to an officer. On the date of the grant 40% of the shares became fully vested (subject to certain restrictions), the remaining 60% vests in equal increments of 20% on the employee’s first, second, and third anniversaries of employment. Compensation expense of $286,000 was recorded during fiscal 2003 in connection with this grant of restricted shares.

Employee Stock Purchase Plan

We adopted an Employee Stock Purchase Plan (ESPP) on July 1, 2002. The maximum number of shares to be issued under this plan is 1,500,000. This plan allows all employees to contribute 1% to 15% of their eligible compensation subject to the requirements of Internal Revenue Code Section 423(b). Employees purchase the stock at a discounted value, which is the lesser of 85% of the closing price on the first business day of the calendar half or 85% of the closing price on the last business day of the calendar half. No compensation expense was recognized for fiscal 2003 or fiscal 2002. Shares of common stock issued under this plan were 44,484 and 30,208 for fiscal 2003 and fiscal 2002, respectively.

Other

Services contributed from Limited Brands totaled $541,000 in fiscal 2001. There were no services contributed from Limited Brands in fiscal 2003 or fiscal 2002. (see Note 10).

8. Stock Options and Warrants

Employee Stock Option Plan

Under our Stock Option Plan, options for the purchase of up to 3,024,757 shares of common stock may be granted to directors, officers and employees of the Company. The plan, as amended May 29, 2002, provides for an additional number of shares to become available for stock option grant, each May 29^th through fiscal 2004, equal to 3% of the total number of issued and outstanding shares of common stock as of the close of business on that date. On May 29, 2003, options to purchase 513,576 became available under the plan. Options granted generally vest over a period of three years and expire seven years after the grant date.

A summary of option activity for fiscal 2003, 2002 and 2001 is as follows:

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	Fiscal Year
	2003					2002					2001
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Options			Price		Options			Price		Options			Price
Options outstanding, beginning of year		1,855,834		$	15.84		1,501,501		$	14.92		1,207,504		$	14.08
Exercised		(133,168	)		9.97		(20,800	)		10.00		(10,001	)		10.00
Granted		781,000			12.66		600,300			17.78		344,000			17.58
Cancelled		(154,933	)		18.34		(225,167	)		15.46		(40,002	)		13.50
Options outstanding, end of year		2,348,733		$	14.95		1,855,834		$	15.84		1,501,501		$	14.92
Total exercisable at end of year		1,247,832		$	15.39		1,137,706		$	14.59		669,953		$	14.33

The following table summarizes information about stock options outstanding at January 31, 2004:

	Options Outstanding						Options Exercisable
			Weighted
			Average		Weighted				Weighted
	Number of		Remaining		Average		Number of		Average
Range of	Options		Contractual		Exercise		Options		Exercise
Exercise Prices	Outstanding		Life in Years		Price		Exercisable		Price
$8.71 - $10.87		577,867		2.7	$	9.96		547,369	$	9.97
$10.88 - $13.05		395,500		6.4		11.64		18,667		12.81
$13.06 - $15.22		425,000		6.2		13.67		2,500		14.38
$17.41 - $19.57		236,966		3.8		18.89		163,862		18.89
$19.58 - $21.75		713,400		3.5		20.27		515,434		20.13
		2,348,733		4.3	$	14.95		1,247,832	$	15.39

We apply Accounting Principles Board (“APB”) No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for stock options. During fiscal 2002, we issued 90,000 options to purchase common stock at prices below fair value. During fiscal 2000, we issued 96,000 options to purchase common stock to officers, employees and a director at prices below fair value. Compensation expense related to the options issued in fiscal 2002 and 2000 is calculated as the excess of the fair value of the Company’s stock at the date of issuance over the option price and is recognized on a straight line basis over the period the options vest. As a result, compensation expense of $115,000, $368,000 and $165,000 were recorded during fiscal 2003, 2002 and 2001, respectively. No compensation expense has been recognized for options granted at prices equal to or greater than fair value at the grant date.

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Warrants

During fiscal 1999, we declared a dividend in the form of a stock warrant to purchase 1,350,000 shares of common stock. The warrant became exercisable on the date of the Company’s initial public offering. The initial exercise price per share was $10.00. On the first day of each month from and including October 1999 to and including September 2000, the exercise price increased by an amount equal to 3 1/3% of the initial exercise price. On the first day of each month thereafter, the exercise price increases by an amount equal to 3 1/3% of the exercise price in effect on the preceding September 1. The fair value of the warrant of $1,461,000 was determined using the Black Scholes option pricing model and was recorded as an increase in warrants with a corresponding decrease in paid-in capital, included in the consolidated statements of shareholders’ equity. The fair value of the warrant is estimated using the following assumptions: no dividend yield; risk-free interest rate of 6%; volatility rate of 50%; and an expected life of four years. In determining the expected life of the warrant, management estimated that the life of the warrant was equal to the earliest determinable exercise date, which was four years from the date of issuance. As of January 31, 2004, the warrant has an exercise price of $44.82 and a weighted average contractual life of 5.5 years.

9. Income Taxes

The provision for income taxes is comprised of the following (in thousands):

	Fiscal Year
	2003			2002		2001
Current:
Federal	$	(2,844	)	$	8,919	$	2,953
State		(461	)		1,468		504
Deferred		6,899			2,255		1,258
Income tax expense	$	3,594		$	12,642	$	4,715

A reconciliation of the federal statutory rate to our effective tax rate is as follows:

	Fiscal Year
	2003			2002			2001
Federal statutory rate		34.0	%		35.0	%		34.0	%
State and local taxes, net of federal tax benefit		3.6			4.2			5.0
Valuation allowance for deferred tax asset		9.9			—			—
Non-deductible goodwill		—			—			1.1
Non-deductible interest		—			—			3.2
Other		2.4			1.1			(1.1	)
Total		49.9	%		40.3	%		42.2	%

Deferred tax assets and liabilities are computed based on the differences between the financial statement and income tax bases of assets and liabilities using the enacted tax rate. Deferred income

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tax expense or benefit is based on the change in assets and liabilities from period to period, subject to an ongoing assessment of realization.

Items giving rise to deferred tax assets (liabilities) are as follows (in thousands):

	Fiscal Year
	2003			2002
Current deferred tax assets (liabilities):
Accrued expenses	$	1,750		$	1,327
Inventory basis		2,398			805
Returns reserve		446			375
Other, net		(614	)		(538	)
Current deferred tax assets, net		3,980			1,969
Long-term deferred assets (liabilities):
Deferred rent		3,558			2,803
Capital loss carryforward		1,235			1,841
Depreciation		(15,178	)		(6,021	)
Other		856			43
Long-term deferred tax liabilities, net		(9,529	)		(1,334	)
Valuation allowance		(715	)		—
Net deferred tax (liability) assets	$	(6,264	)	$	635

During fiscal 2003, we recognized income tax expense of $715,000 to establish a valuation allowance against our capital loss carryforwards that we do not expect to utilize before it expires. As of January 31, 2004, we have unused capital loss carryforwards of $3.1 million that expire in fiscal 2005.

10. Related Party Transactions

During 2003, we purchased for $2.2 million from Limited Brands, a parcel of land adjacent to our existing distribution facility for potential development in the event expansion of our current facility becomes necessary to accommodate future growth.

During fiscal 1999, we entered into a services agreement whereby Limited Brands continued to provide real estate and store planning services. The agreement terminated 90 days after the completion of the initial public offering. During fiscal 2001, Limited Brands contributed services totaling $541,000, which was recorded as selling, general and administrative expenses and paid-in capital.

Limited Brands is a guarantor of our obligations under the leases for eight of our stores. We agreed to reimburse Limited Brands for any amounts paid by them under these guarantees. No amounts were paid under these guarantees in fiscal 2003, 2002 or 2001.

We recorded $3,178,000 of interest expense during fiscal 2001 in connection with the subordinated and junior subordinated notes payable to Freeman Spogli and Limited Brands.

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During fiscal 2001, we recorded a bad debt recovery of approximately $600,000 related to an investment in MVP.com that was written off during fiscal 2000.

Pursuant to a stockholders agreement, Freeman Spogli and Limited Brands have agreed to vote all of their shares in the election of directors in favor of the following persons: four board nominees designated by Freeman Spogli, two board nominees designated by Limited Brands, our then current chief executive officer, our then current chairman of the board, and one or more additional nominees upon whom Freeman Spogli and Limited Brands shall agree. The number of board nominees that Freeman Spogli and Limited Brands are entitled to nominate under the agreement, both before and after the initial public offering, decreases if the number of shares held by such party falls below certain thresholds set forth in the stockholders agreement. In addition, until one year after the date on which any person other than Freeman Spogli and Limited Brands and their respective affiliates own 20% or more of the Company’s shares, Limited Brands has agreed to vote against any combination of the Company unless Freeman Spogli consents to the combination. Benchmark Capital, previously party to this stockholders agreement, distributed its shares in the Company to its limited partners in 2003 and, as a result, is no longer bound by the stockholders agreement.

During fiscal 2002 we paid Limited Brands $150,000 for recruiting costs associated with its search for a replacement for C. David Zoba, whom we hired from Limited Brands as our Executive Vice President, General Counsel and Secretary.

We have verbal consulting agreements with two members of the board of directors to provide real estate, marketing and other general consulting services. Either party can terminate the agreements at any time. In May 2003, we terminated one of the verbal consulting agreements. We recognized expense of $75,000, $171,000 and $182,000 in fiscal 2003, 2002 and 2001, respectively, for these consulting services.

11. Fair Value of Financial Instruments

The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in an arm’s length transaction between knowledgeable, willing parties. The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash, Accounts Receivable, Accounts Payable

The carrying amounts approximate the fair value because of the short maturity of those instruments.

Long-term Debt

The fair value is estimated based on discounting expected cash flows at the rates currently offered to the Company for debt of the same remaining maturities. As of January 31, 2004 and February 1, 2003, the carrying value of the long-term debt approximates its fair value.

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12. Commitments

We are involved in various legal proceedings that are incidental to the conduct of the business. Although the amount of any liability with respect to these proceedings cannot be determined, in the opinion of management, after consultation with legal counsel, any such liability will not have a material adverse effect on the financial position or results of operations of the Company.

We have non-cancelable operating leases for office facilities, warehouse facilities, real estate and equipment. Store rent consists of a fixed amount, plus, in some cases, contingent rent based on a percentage of sales exceeding a specific amount. Certain leases provide for future rent escalations and renewal options which are accounted for on a straight-line basis. In addition to basic rent, store leases provide for payment of common area maintenance, taxes and other expenses. Rent expense for fiscal 2003, 2002 and 2001 was $35.2 million, $27.8 million and $22.5 million, respectively and includes contingent rental expense of $8,000, $9,000 and $3,000, respectively.

Future minimum lease payments under non-cancelable lease agreements with an initial or remaining term of at least one year at January 31, 2004 are as follows (in thousands):

Fiscal Year
2004	$	41,936
2005		44,915
2006		44,516
2007		44,600
2008		45,207
2009 and thereafter		432,760
Total	$	653,934

13. Retirement Plan

We sponsor a qualified defined contribution savings and retirement plan. Participation in the qualified plan is available to all associates who have attained the age of 21. Eligible employees participating in the plan may contribute between 1% and 15% of their eligible compensation. We will make matching contributions to eligible participants who have completed one year of service, in which they have worked at least 1,000 hours. We will make a matching contribution to these participants of 50% of the first 3% of the employees’ eligible compensation contributed to the plan. We made matching contributions for fiscal 2003, 2002 and 2001 of $387,000, $404,000 and $380,000, respectively.

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14. Supplemental Disclosure of Cash Flow Information

We paid cash for interest totaling $2,736,000, $1,685,000 and $4,886,000 in fiscal 2003, 2002 and 2001, respectively. We paid cash for income taxes during fiscal 2003, 2002 and 2001 of $7,476,000, $3,741,000 and $6,575,000, respectively.

Notes receivable totaling $285,000 were received from management to purchase common stock during fiscal 2001. No notes receivable were received during fiscal 2003 or 2002.

Interest capitalized into construction in progress during fiscal 2003, 2002 and 2001 was $651,000, $315,000 and $291,000, respectively.

During fiscal 2003, we issued 100,000 shares of restricted stock totaling $1,143,000 to an officer. No restricted stock was issued during fiscal 2002 or fiscal 2001.

15. Subsequent Event

On June 21, 2004, we agreed to be acquired by Dick’s Sporting Goods, Inc., (“Dick’s”). We entered into an Agreement and Plan of Merger with Dick’s and Diamondbacks Acquisition Inc., a wholly owned subsidiary of Dick’s.

On July 29, 2004, Dick’s acquired all of our common stock for $16.75 per share in cash, and we became a wholly owned subsidiary of Dick’s. Dick’s paid $362.1 million to fund and consummate the acquisition, including the repayment of $57.2 million of our indebtedness.

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EX-99.2

Exhibit 99.2

Galyan’s Trading Company, Inc.
Condensed Consolidated Statements of Operations
For the Three Month Periods Ended May 1, 2004 and May 3, 2003
(dollars in thousands, except per share data)

	May 1, 2004			May 3, 2003
	(Unaudited)			(Unaudited)
Net sales	$	157,661		$	129,564
Cost of sales		114,668			95,920
Gross profit		42,993			33,644
Selling, general and administrative expenses		49,434			37,476
Operating loss		(6,441	)		(3,832	)
Interest expense		1,054			467
Interest income		(81	)		(22	)
Loss before income tax benefit		(7,414	)		(4,277	)
Income tax benefit		(2,936	)		(1,711	)
Net loss	$	(4,478	)	$	(2,566	)
Basic loss per share	$	(0.26	)	$	(0.15	)
Diluted loss per share	$	(0.26	)	$	(0.15	)
Weighted average shares used in calculating loss per common share:
Basic		17,267,643			17,089,452
Diluted		17,267,643			17,089,452

See accompanying Notes to Condensed Consolidated Financial Statements.

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Galyan’s Trading Company, Inc.
Condensed Consolidated Balance Sheets
As of May 1, 2004 and January 31, 2004
(dollars in thousands, except share data)

	May 1, 2004			January 31, 2004
	(Unaudited)			(Note 1)
Assets
Current assets:
Cash and cash equivalents	$	9,754		$	7,120
Receivables, net		10,539			10,861
Merchandise inventories		177,245			155,661
Deferred income taxes		6,592			3,980
Other current assets		8,109			9,425
Total current assets		212,239			187,047
Property and equipment, net		188,936			186,450
Goodwill, net		18,334			18,334
Other assets, net		2,325			2,414
Total assets	$	421,834		$	394,245
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	84,878		$	71,567
Accrued expenses		40,510			40,428
Current portion of long-term debt		117			137
Total current liabilities		125,505			112,132
Long-term liabilities:
Debt, net of current portion		66,736			49,578
Deferred income taxes		10,487			10,244
Other long-term liabilities		9,518			8,808
Total long-term liabilities		86,741			68,630
Shareholders’ equity:
Common stock and paid-in capital, no par value; 50,000,000 shares authorized; 17,378,368 and 17,362,368 shares issued and outstanding		195,050			194,888
Notes receivable from shareholders		(439	)		(689	)
Unearned compensation		(686	)		(857	)
Warrants		1,461			1,461
Retained earnings		14,202			18,680
Total shareholders’ equity		209,588			213,483
Total liabilities and shareholders’ equity	$	421,834		$	394,245

See accompanying Notes to Condensed Consolidated Financial Statements.

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Galyan’s Trading Company, Inc.
Condensed Consolidated Statements of Cash Flows
For the Three Month Periods Ended May 1, 2004 and May 3, 2003
(dollars in thousands)

	May 1, 2004			May 3, 2003
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net loss	$	(4,478	)	$	(2,566	)
Adjustments to reconcile net loss to net cash from operating activities
Depreciation and amortization		7,400			5,649
Amortization of financing intangible		115			126
Deferred income taxes		(2,369	)		(1,562	)
(Gain) loss on disposal of property and equipment		(94	)		19
Deferred rent and other non-cash expense		755			1,106
Changes in certain assets and liabilities:
Accounts receivable		(2,270	)		245
Merchandise inventories		(21,584	)		(32,883	)
Other assets		1,314			(3,688	)
Accounts payable and accrued expenses		10,439			11,125
Net cash used in operating activities		(10,772	)		(22,429	)
Cash flows from investing activities:
Capital expenditures		(9,792	)		(18,172	)
Increase (decrease) in net accounts payable for capital expenditures		5,548			(5,533	)
Lease incentives		127			—
Net cash used in investing activities		(4,117	)		(23,705	)
Cash flows from financing activities:
Net borrowings on revolving line of credit		17,175			48,650
Principal payments on long-term debt and other obligations		(37	)		(6,030	)
Payment of financing costs		(24	)		(1,453	)
Payments on notes receivable from shareholders		249			15
Proceeds from sale of common stock		160			275
Net cash provided by financing activities		17,523			41,457
Net increase (decrease) in cash and cash equivalents		2,634			(4,677	)
Cash and cash equivalents, beginning of period		7,120			11,890
Cash and cash equivalents, end of period	$	9,754		$	7,213
Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	1,005		$	665
Income taxes	$	1,370		$	6,950

See accompanying Notes to Condensed Consolidated Financial Statements.

33

GALYAN’S TRADING COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE QUARTER ENDED MAY 1, 2004

Note 1: Organization and Significant Accounting Policies

Description of Business

We are a specialty retailer that offers a broad range of products appealing to consumers with active lifestyles, from the casual consumer to the serious sports enthusiast. We sell outdoor and athletic equipment, apparel, footwear and accessories, as well as casual apparel and footwear. We have two primary store formats. Our typical store built over the past several years has two shopping levels, ranges in size from approximately 80,000 to 100,000 gross square feet, and features an open, airy atmosphere with a fifty five foot high interior atrium, metal appointments and interactive elements, such as rock climbing walls and putting greens, that are designed to create an enjoyable and interactive shopping experience appealing to both the casual consumer and the serious sports enthusiast. Our one-level stores, which are generally about 65,000 gross square feet, contain many of the same features as our two-level stores, including a thirty-foot climbing wall. We intend to use both formats in the future, depending on many factors, including market size, available space, and store cost considerations. As of May 1, 2004, we operated 47 stores in 21 states.

Basis of Presentation

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with the requirements of Form 10-Q and, therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements reflect all adjustments that are necessary for a fair presentation of the results of operations for the periods shown. All such adjustments are of a normal recurring nature. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.

The balance sheet at January 31, 2004 has been derived from audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

This Report should be read in conjunction with our Annual Report on Form 10-K for the year ended January 31, 2004, as filed with the Securities and Exchange Commission (“SEC”).

34

Loss Per Share

Loss per share of common stock is based on the weighted average number of shares outstanding during the related periods. Since we had a loss from operations for the three month periods ended May 1, 2004 and May 3, 2003, 106,597 and 58,297 incremental shares, respectively, relating to stock options and warrants were excluded from the calculation of diluted loss per share due to their anti-dilutive effect.

Stock Compensation

In accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure, which amends SFAS No. 123, Accounting for Stock-Based Compensation, we account for stock-based employee compensation under the provisions of APB Opinion No. 25 and related interpretations.

The following illustrates the pro forma effect on net loss and loss per share if we had applied the fair value recognition provisions of SFAS No. 123:

	Three Month Periods Ended
	May 1, 2004			May 3, 2003
	(Unaudited)			(Unaudited)
Net loss as reported	$	(4,478	)	$	(2,566	)
Add: Stock-based compensation expense included in reported net loss, net of related tax effects		—			25
Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax effects		(497	)		(316	)
Pro forma net loss	$	(4,975	)	$	(2,857	)
Loss per share:
Basic, as reported	$	(0.26	)	$	(0.15	)
Basic, pro forma	$	(0.29	)	$	(0.17	)
Diluted, as reported	$	(0.26	)	$	(0.15	)
Diluted, pro forma	$	(0.29	)	$	(0.17	)

The pro forma amounts are not representative of the effects on reported earnings for future periods.

The weighted average fair value of options granted for the three month periods ended May 1, 2004 and May 3, 2003 were $4.89 and $4.95, respectively. The weighted average fair value of the options calculated in accordance with SFAS No. 123 were determined using the Black-Scholes option-pricing model with the following weighted average assumptions:

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	Three Month Periods Ended
	May 1, 2004			May 3, 2003
Expected dividend yield		0	%		0	%
Expected stock price volatility		64	%		63	%
Risk-free interest rate range		2.68% - 2.98	%		2.38	%
Expected life of options		5			4

Note 2: Long-Term Debt

Our revolving credit facility maximum borrowing capacity is $250.0 million of which $30.0 million may be used for the issuance of letters of credit. The revolving credit facility is an asset-based loan with a borrowing base calculated on certain percentages of eligible inventory, eligible accounts receivables, and certain real property as defined in the agreement. The revolving credit facility bears interest, at our election, at either an adjusted prime rate or an adjusted LIBOR, in each case plus additional interest, which varies depending on our availability level or EBITDA measured at each quarter end. Availability is defined as the lesser of the monthly borrowing base or $250.0 million, minus the total borrowings, including letters of credit. We pay an annual commitment fee on the unused portions of the revolving credit facility at a variable amount based on utilization of the total facility. As of May 1, 2004, the commitment fee rate was 0.425%. We will not be subject to any financial covenants, provided we maintain a minimum of $35.0 million of availability. The revolving credit facility contains other covenants, including covenants that restrict our ability to incur indebtedness or to create various liens, and restrict our ability to engage in mergers or acquisitions, sell assets, or make junior payments, including cash dividends. As of May 1, 2004, we were in compliance with all applicable covenants. The revolving credit facility is secured by a first priority security interest in our cash, inventory, intellectual property, and certain real estate that is included in the borrowing base. Our subsidiaries have guaranteed, and any future subsidiaries will be required to guarantee, our obligations under the revolving credit facility. As of May 1, 2004, we had $55.0 million in outstanding borrowings and an availability of $53.9 million, net of $5.6 million used in support of letters of credit, under our revolving credit facility.

During fiscal 2003, we sold our interest in buildings and leasehold improvements for two store locations for approximately $12.0 million and simultaneously entered into lease agreements for these two store locations. The transaction included our store locations in Buffalo, New York, and Greenwood, Indiana. Although we leased back the properties, this transaction was accounted for as a financing obligation, with the future lease payments classified as a liability in our financial statements and quarterly lease payments classified as payments of principal and interest expense relating to a financing obligation. The net proceeds from this transaction were used to repay borrowings under our revolving credit facility. As of May 1, 2004, we had an outstanding obligation of $11.7 million, with a fixed interest rate of 10.6% and with a maturity date in 2024.

36

Long-term debt consists of the following at May 1, 2004 and January 31, 2004 (in thousands):

	May 1, 2004			January 31, 2004
	(Unaudited)			(Note 1)
Bank and other:
Revolving line of credit	$	55,000		$	37,825
Financing obligations		11,675			11,685
Capital lease obligations		178			205
Total long-term debt		66,853			49,715
Less current maturities		(117	)		(137	)
Total long-term debt, net of current maturities	$	66,736		$	49,578

Note 3: Shareholders’ Equity

During the first quarter of fiscal 2004, we issued options to purchase 357,500 shares of common stock under our 1999 Stock Option Plan at exercise prices ranging from $8.74 to $8.80 per share to certain employees. These options vest over a three year period, expire seven years after the grant date and were granted at fair value on the grant date.

Note 4: Subsequent Event

On June 21, 2004, we agreed to be acquired by Dick’s Sporting Goods, Inc., (“Dick’s”). We entered into an Agreement and Plan of Merger with Dick’s and Diamondbacks Acquisition Inc., a wholly owned subsidiary of Dick’s.

On July 29, 2004, Dick’s acquired all of our common stock for $16.75 per share in cash, and we became a wholly owned subsidiary of Dick’s. Dick’s paid $362.1 million to fund and consummate the acquisition, including the repayment of $57.2 million of our indebtedness.

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EX-99.3

Exhibit 99.3

PRO FORMA FINANCIAL INFORMATION

On July 29, 2004, Dick’s Sporting Goods, Inc. (“Dick’s”) acquired all of the common stock of Galyan’s Trading Company, Inc. (“Galyan’s”) for $16.75 per share in cash, and Galyan’s became a wholly owned subsidiary of Dick’s.

The historical financial information for the Company was derived from the audited financial statements from the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004, and from the unaudited financial statements contained in the Company’s Quarterly Report on Form 10-Q for the 13 weeks ended May 1, 2004. The historical financial information for Galyan’s was derived from the audited financial statements in the Galyan’s Annual Report on Form 10-K for the fiscal year ended January 31, 2004 and from the unaudited financial statements contained in Galyan’s Quarterly Report on Form 10-Q for the 13 weeks ended May 1, 2004.

The unaudited pro forma Consolidated Statements of Income contained in this report gives effect to the acquisition of Galyan’s. The unaudited pro forma Consolidated Statements of Income for the 52 weeks ended January 31, 2004 assume that the Company acquired Galyan’s at the beginning of fiscal 2003, February 2, 2003. The unaudited pro forma Consolidated Statements of Income for the 13 weeks ended May 1, 2004 assume that the Company acquired Galyan’s at the beginning of the 13 weeks ended May 1, 2004, February 1, 2004.

A pro forma consolidated balance sheet has not been included as the transaction is reflected in the consolidated balance sheet of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2004, as filed with the SEC on September 9, 2004.

In connection with the acquisition of Galyan’s on July 29, 2004, the Company recorded goodwill and other intangible assets in accordance with SFAS No. 141, “Business Combinations”. The $159.4 million of goodwill and other intangible assets was recorded as the excess of the purchase price of $362.1 million over the estimated fair value of the net amounts assigned to assets acquired and liabilities assumed.

The Company expects to incur certain charges and expenses related to integration of the operations of Galyan’s. The Company is currently assessing the business processes and circumstances that bear upon the operations, facilities and other assets of the business, and is developing a strategic and operating plan. The integration may include charges and expenses for the following items: duplicative costs to operate two corporate offices for a period of time after the merger becomes effective, costs associated with the proposed closing of certain Galyan’s and Company stores and Galyan’s corporate headquarters, costs related to Galyan’s associate severance, retention bonuses and relocation, or other charges identified in connection with the development and implementation of the plan. The Company is also currently in the process of obtaining an independent appraisal for certain assets, and refining its internal fair value estimates. The unaudited pro forma consolidated financial statements do not reflect such anticipated charges and expenses. In addition, the pro-forma amounts do not reflect any benefits from economies which might be achieved from combining the operations.

38

Dick’s cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained or implied in this Current Report on Form 8-K/A or made by Dick’s management involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond Dick’s control. Accordingly, future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. You can identify these statements as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as “believe,” “anticipate,” “expect,” “estimate,” “predict,” “intend,” “plan,” “project,” “will,” “will be,” “will continue,” “will result,” “could,” “may,” “might” or any variations of such words or other words with similar meanings.

Numerous risk factors, including those discussed in other reports or filings filed by Dick’s with the Securities and Exchange Commission (including Dick’s Form 10-K for the year ended January 31, 2004) could cause actual results for 2004 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this report or otherwise made by Dick’s management. Additionally, risks associated with combining businesses and achieving expected savings and synergies and/or with assimilating acquired companies and the fact that acquisition, integration and store closing costs related to the Galyan’s acquisition are difficult to predict with a level of certainty and may be material.

Dick’s operates in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on Dick’s’ business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Dick’s does not assume any obligation and does not intend to update any forward-looking statements.

The pro-forma information contained in this report is based upon available information and assumptions and does not necessarily reflect the actual results that would have occurred had the companies been combined during the periods presented, nor is it necessarily indicative of the future results of operations of the combined companies.

39

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)

	Historical
	52 Weeks Ended
	January 31, 2004
							Reclassifications
							and Pro Forma
	Dick’s			Galyan’s			Adjustments				Pro Forma
Net sales	$	1,470,845		$	690,701		$	(2,481	)	(A)	$	2,159,065
Cost of goods sold, including occupancy and distribution costs		1,063,106			500,334			17,438		(B)		1,580,878
GROSS PROFIT		407,739			190,367			(19,919	)			578,187
Selling, general and administrative expenses		314,885			180,476			(24,916	)	(A) (B) (C)		470,445
Pre-opening expenses		6,528			—			4,997		(C)		11,525
INCOME FROM OPERATIONS		86,326			9,891			—				96,217
Interest expense, net		1,831			2,856			5,644		(D)		10,331
Other income		(3,536	)		(162	)		162		(E)		(3,536	)
INCOME BEFORE INCOME TAXES		88,031			7,197			(5,806	)			89,422
Provision (benefit) for income taxes		35,212			3,594			(2,322	)	(F)		36,484
NET INCOME	$	52,819		$	3,603		$	(3,484	)		$	52,938
EARNINGS PER COMMON SHARE:
Basic	$	1.18									$	1.18
Diluted	$	1.05									$	1.05
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		44,774										44,774
Diluted		50,280										50,280

See notes to unaudited pro forma consolidated financial statements.

40

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)

	Historical
	13 Weeks Ended
	May 1, 2004
							Reclassifications
							and Pro Forma
	Dick’s			Galyan’s			Adjustments				Pro Forma
Net sales	$	364,207		$	157,661		$	(699	)	(A)	$	521,169
Cost of goods sold, including occupancy and distribution costs		261,528			114,668			6,009		(B)		382,205
GROSS PROFIT		102,679			42,993			(6,708	)			138,964
Selling, general and administrative expenses		82,167			49,434			(8,489	)	(A) (B) (C)		123,112
Pre-opening expenses		2,742			—			1,781		(C)		4,523
INCOME (LOSS) FROM OPERATIONS		17,770			(6,441	)		—				11,329
Interest expense, net		642			1,054			994		(D)		2,690
Other income		(1,000	)		(81	)		81		(E)		(1,000	)
INCOME (LOSS) BEFORE INCOME TAXES		18,128			(7,414	)		(1,075	)			9,639
Provision (benefit) for income taxes		7,251			(2,936	)		(430	)	(F)		3,885
NET INCOME (LOSS)	$	10,877		$	(4,478	)	$	(645	)		$	5,754
EARNINGS PER COMMON SHARE:
Basic	$	0.23									$	0.12
Diluted	$	0.21									$	0.11
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		47,321										47,321
Diluted		52,392										52,392

See notes to unaudited pro forma consolidated financial statements.

41

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

(A) To reflect adjustments to Galyan’s amounts to conform them to the Company’s presentation, including adjustments to reclassify discounts on Galyan’s associate’s purchases of product as a reduction of net sales as opposed to an operating expense.

(B) To reflect adjustments to Galyan’s amounts to conform them to the Company’s presentation, including adjustments to reclassify certain payroll and benefits of buying staff from cost of goods sold to selling, general and administrative expenses, and adjustments to reclassify certain store expenses, primarily depreciation expense, from selling, general and administrative expenses to cost of goods sold.

(C) To reflect adjustments to Galyan’s amounts to conform them to the Company’s presentation, including adjustments to reclassify store preopening costs from selling, general and administrative expenses to preopening expenses.

(D) The pro forma adjustments to interest expense are as follows:

	52 Weeks Ended			13 Weeks Ended
	January 31, 2004			May 1, 2004
To reflect an increase in interest expense due to the increase in borrowings under the amended credit facility to finance the acquisition.	$	5,806	(G)	$	1,075	(H)
Reclassification of interest income to interest expense to conform to the Company’s presentation.		(162	)  (E)		(81	)  (E)
	$	5,644		$	994

(E) Reclassification of interest income to interest expense, net to conform to the Company’s presentation.

(F) To record the tax effect of the net pro forma adjustments and record tax expense at an estimated effective tax rate of 40% for the 52 weeks ended January 31, 2004 and 13 weeks ended May 1, 2004.

(G) To reflect an increase in interest expense due to borrowings under the amended credit facility to finance the acquisition. Interest expense was estimated using an annual average interest rate of 2.63%. This represents an estimate of the average variable interest rate that the borrowings would have incurred over the fiscal year ending January 31, 2004, if the borrowings had occurred under the terms of the amended credit facility that was entered into at the effective date of the acquisition. A change of one-eighth of one percentage point to the estimated interest rate would change our annual pro forma after-tax earnings by approximately $0.3 million or $0.01 per diluted share. A reconciliation of the calculation of the pro forma adjustment to interest expense is presented below (in thousands, except for the interest rate):

42

Additional borrowings under the amended credit facility (net of cash on hand)	$	350,995
Estimated average variable interest rate		2.63	%
Estimated annual interest expense		9,231
Annual amortization of the Company’s loan acquisition costs over the four year loan		299
Annual amortization of Galyan’s loan acquisition costs over the four year loan		(526	)
Estimated total pro forma consolidated interest expense		9,004
Historical consolidated interest expense		(3,198	)
Pro forma adjustment to interest expense	$	5,806

(H) To reflect an increase in interest expense due to borrowings under the amended credit facility to finance the acquisition. Interest expense was estimated using an annual average interest rate of 2.35%. This represents an estimate of the average variable interest rate that the borrowings would have incurred over the 13 weeks ended May 1, 2004, if the borrowings had occurred under the terms of the amended credit facility that was entered into at the effective date of the acquisition. A change of one-eighth of one percentage point to the estimated interest rate would change our 13 weeks ended May 1, 2004 pro forma after-tax earnings by approximately $0.1 million or a de minimis impact on earnings per diluted share. A reconciliation of the calculation of the pro forma adjustment to interest expense is presented below (in thousands, except for the interest rate):

Additional borrowings under the amended credit facility (net of cash on hand)	$	350,995
Estimated average variable interest rate for the quarter (based on estimated annual rate of 2.35%)		0.59	%
Estimated quarterly interest expense		2,062
Quarterly amortization of the Company’s loan acquisition costs over the four year loan		75
Quarterly amortization of Galyan’s loan acquisition costs over the four year loan		(115	)
Estimated total pro forma consolidated interest expense		2,022
Historical consolidated interest expense, net of interest income		(947	)
Pro forma adjustment to interest expense	$	1,075

43