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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”), 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. The unaudited pro forma condensed combined financial information as of and for the year ended February 1, 2025 is derived from DICK’S and Foot Locker’s historical consolidated financial statements as included in the respective filings on Form 10-K, which are incorporated by reference.
 
The unaudited pro forma condensed combined financial information gives effect to the accounting for the Merger (the “Transaction Accounting Adjustments”) and financing impacts (the “Financing Adjustments” and, collectively, the “Adjustments”). All terms defined in this section of the Offering Memorandum are used solely for the purposes of this section and do not apply to any other section of this Offering Memorandum.
 
In the accompanying unaudited pro forma condensed combined financial information, the historical consolidated financial statements of DICK’S 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 any shares owned by the Company, Foot Locker, or any of their subsidiaries) 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”) (individually under each scenario described below, the “Merger Consideration”).
 
The Merger Agreement provides that:
 
•
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 Company 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;
 
•
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
 
•
Each outstanding Foot Locker option, whether or not vested (each, an “In-the-Money Option”), 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).
 
In connection with the Merger Agreement, the Company entered a commitment letter, dated as of May 15, 2025, among the Company and Goldman Sachs Bank USA (“GS Bank”), pursuant to which GS Bank has agreed to provide, subject to the satisfaction of customary closing conditions, up to $2.4 billion of senior bridge term loans.
 
The unaudited pro forma condensed combined financial information assumes that DICK’S does not anticipate drawing down on the senior bridge term loans but instead financing the Merger through issuance of unsecured senior notes for an amount of $1.7 billion with a fixed interest rate of 6.4% per annum (“Debt Financing”). The Debt Financing, together with cash on hand, is assumed to be sufficient for purposes of financing the Cash Merger Consideration and expenses in connection with the Merger.
 
The Company has not issued any unsecured senior notes or drawn down on the senior bridge term loans, and any financing related to the Merger may be different from the amount assumed for purposes of the unaudited pro forma condensed combined financial information. These assumptions and expectations are subject to change, and the debt issuance costs to be incurred and related interest expense could vary significantly from what is assumed in the unaudited pro forma condensed combined financial information. Other factors that are subject to change include, but are not limited to, the timing of borrowings, the amount of cash on hand at the time of the closing, and inputs to interest rate determination on debt instruments issued.
 
The unaudited pro forma condensed combined financial information is presented under the following two scenarios:
 
•
Scenario A - Cash Merger Consideration: Assumes all Foot Locker’s shareholders elect the right to receive the consideration of $24.00 per share in cash.
 
•
Scenario B - Stock Merger Consideration: Assumes all Foot Locker’s shareholders elect the right to receive 0.1168 shares of Company Common Stock.
 
The Merger will be accounted for as a business combination using the acquisition method with DICK’S 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 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:
 
•
Certain reclassifications to conform Foot Locker’s historical financial statement presentation to DICK’S historical financial statement presentation;

1
•
Adjustments to reflect purchase accounting under ASC 805;
 
•
Proceeds and uses of the financing entered in connection with the Merger; and
 
•
Non-recurring transaction costs in connection with the Merger.
 
2
Unaudited Pro Forma Condensed Combined Balance Sheet
  
As of February 1, 2025
  
(in thousands)
  
               
Scenario A - Cash Merger Consideration
    
Scenario B - Stock Merger
Consideration
  
   
DICK’S
Sporting Goods,
Inc. (Historical)
    
Foot Locker, Inc.
(Historical, adjusted
for reclassifications)
    
Transaction
Accounting
Adjustments
    
Notes
    
Financing
Adjustments
    
Notes
    
Pro Forma
Combined
    
Transaction
Accounting
Adjustments
  
Notes
    
Pro Forma
Combined
  
ASSETS
                                                          
CURRENT ASSETS
                                                          
Cash and cash equivalents
  
$
1,689,940
    
$
401,000
    
$
(2,302,029
)
    
3A1
    
$
1,719,207
      
3N

 
$
1,363,661
    
$
(16,087
)
  
3A2
    
$
1,930,396
  
                     
(56,363
)
    
3D

   
-
                      
(56,363
)
  
3D

       
                     
(2,000
)
    
3E

   
-
                      
(2,000
)
  
3E

       
                     
(23,294
)
    
3G

                           
(23,294
)
  
3G

       
                     
(7,500
)
    
3H

   
-
                      
(7,500
)
  
3H

       
                     
(55,300
)
    
3I

   
-
                      
(55,300
)
  
3I

       
Accounts receivable, net
    
214,250
      
156,000
      
-
              
-
              
370,250
      
-
            
370,250
  
Income taxes receivable
    
4,920
      
-
      
-
              
-
              
4,920
      
-
            
4,920
  
Inventories, net
    
3,349,830
      
1,525,000
      
-
              
-
              
4,874,830
      
-
            
4,874,830
  
Prepaid expenses and other current assets
    
158,767
      
177,000
      
-
              
-
              
335,767
      
-
            
335,767
  
Total current assets
    
5,417,707
      
2,259,000
      
(2,446,486
)
            
1,719,207
              
6,949,428
      
(160,544
)
          
7,516,163
  
Property and equipment, net
    
2,069,914
      
910,000
      
103,000
      
3B

   
-
              
3,082,914
      
103,000
    
3B

   
3,082,914
  
Operating lease assets
    
2,367,317
      
2,061,000
      
72,000
      
3K

   
-
              
4,500,317
      
72,000
    
3K

   
4,500,317
  
Intangible assets, net
    
58,598
      
365,000
      
(145,000
)
    
3C1
      
-
              
278,598
      
(345,000
)
  
3C2
      
78,598
  
Goodwill
    
245,857
      
759,000
      
(575,047
)
    
3M1
      
-
              
429,810
      
(742,544
)
  
3M2
      
262,313
  
Deferred income taxes
    
52,684
      
143,000
      
2,137
      
3L1
      
-
              
197,821
      
54,137
    
3L2
      
249,821
  
Other assets
    
246,617
      
251,000
      
(4,444
)
    
3E

   
-
              
493,173
      
(4,444
)
  
3E

   
493,173
  
TOTAL ASSETS
  
$
10,458,694
    
$
6,748,000
    
$
(2,993,840
)
          
$
1,719,207
            
$
15,932,061
    
$
(1,023,395
)
        
$
16,183,299
  
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                              
CURRENT LIABILITIES
                                                                              
Accounts payable
  
$
1,497,743
    
$
378,000
      
-
              
-
            
$
1,875,743
      
-
          
$
1,875,743
  
Accrued expenses
    
653,324
      
327,000
      
-
              
-
              
980,324
      
-
            
980,324
  
Operating lease liabilities
    
503,236
      
507,000
      
-
              
-
              
1,010,236
      
-
            
1,010,236
  
Income taxes payable
    
30,718
      
-
      
-
              
-
              
30,718
      
-
            
30,718
  
Deferred revenue and other liabilities
    
395,041
      
118,000
      
-
              
-
              
513,041
      
-
            
513,041
  
Total current liabilities
    
3,080,062
      
1,330,000
      
-
              
-
              
4,410,062
      
-
            
4,410,062
  

3
Unaudited Pro Forma Condensed Combined Balance Sheet
As of February 1, 2025
(in thousands)
               
Scenario A - Cash Merger Consideration
    
Scenario B - Stock Merger
Consideration
  

   
DICK’S
Sporting
Goods, Inc.
(Historical)
    
Foot Locker,
Inc. (Historical,
adjusted for
reclassifications)
    
Transaction
Accounting
Adjustments
    
Notes
    
Financing
Adjustments
    
Notes
    
Pro Forma
Combined
    
Transaction
Accounting
Adjustments
    
Notes
    
Pro Forma
Combined
  
LONG-TERM LIABILITIES
                                                      
Revolving credit borrowings
    
-
      
-
      
-
            
-
            
-
      
-
        
Long-term debt and obligations under finance leases
    
1,484,217
      
441,000
      
1,851
      
3E

   
1,719,207
      
3N

   
3,626,275
      
1,851
      
3E

   
1,907,068
                     
(20,000
)
    
3J

   
-
                      
(20,000
)
    
3J
     
Long-term operating lease liabilities
    
2,500,307
      
1,831,000
      
-
              
-
              
4,331,307
      
-
              
4,331,307
  
Other long-term liabilities
    
195,844
      
237,000
      
-
              
-
              
432,844
      
-
              
432,844
  
Total long-term liabilities
    
4,180,368
      
2,509,000
      
(18,149
)
            
1,719,207
              
8,390,426
      
(18,149
)
            
6,671,219
  
COMMITMENTS AND CONTINGENCIES
    
-
      
-
      
-
              
-
              
-
      
-
              
-
 		  
STOCKHOLDERS' EQUITY
                                                                                
Preferred stock
    
-
      
-
      
-
              
-
              
-
      
-
              
-
 		  
Common stock
    
567
      
802,000
      
(802,000
)
    
3F

   
-
              
567
      
111
      
3A2
      
678
                                     
-
                      
(802,000
)
    
3F

     
Class B common stock
    
236
      
-
      
-
              
-
              
236
      
-
              
236
 		  
Additional paid-in capital
    
1,495,329
      
-
      
12,966
      
3A1
      
-
              
1,508,295
      
1,983,300
      
3A2
      
3,478,629
Retained earnings
    
6,392,513
      
2,494,000
      
(56,363
)
    
3D

   
-
              
6,312,856
      
(56,363
)
    
3D

   
6,312,856
                     
(2,494,000
)
    
3F

   
-
                      
(2,494,000
)
    
3F

     
                     
(23,294
)
    
3G

   
-
                      
(23,294
)
    
3G

     
Accumulated other comprehensive loss
    
(755
)
    
(383,000
)
    
383,000
      
3F

   
-
              
(755
)
    
383,000
      
3F

   
(755
Treasury stock, at cost
    
(4,689,626
)
    
(4,000
)
    
4,000
      
3F

   
-
              
(4,689,626
)
    
4,000
      
3F

   
(4,689,626
Total stockholders' equity
    
3,198,264
      
2,909,000
      
(2,975,691
)
            
-
              
3,131,573
      
(1,005,246
)
            
5,102,018
  
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
  
$
10,458,694
    
$
6,748,000
    
$
(2,993,840
)
          
$
1,719,207
            
$
15,932,061
    
$
(1,023,395
)
           $
16,183,299
  

 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
  
(in thousands, except per share amounts)
  
               
Scenario A - Cash Merger Consideration
    
Scenario B - Stock Merger
Consideration
  
                                                             
   
DICK’S Sporting
Goods, Inc.
 (Historical)
    
Foot Locker, Inc.
(Historical, adjusted
for reclassifications)
    
Transaction Accounting
Adjustments
    
Notes
    
Financing
Adjustments
    
Notes
    
Pro Forma Combined
    
Transaction
Accounting
Adjustments
    
Notes
    
Pro Forma
Combined
  
                                                             
Net sales
  
$
13,442,849
    
$
7,988,000
      
-
            
-
          
$
21,430,849
      
-
          
$
21,430,849
  
Cost of goods sold, including occupancy
and distribution costs
    
8,617,153
      
5,785,000
      
8,737
      
4A

   
-
            
14,428,890
      
8,737
      
4A

   
14,428,890
  
                     
18,000
      
4J

                         
18,000
      
4J

       
GROSS PROFIT
    
4,825,696
      
2,203,000
      
(26,737
)
            
-
            
7,001,959
      
(26,737
)
            
7,001,959
  
Selling, general and administrative expenses
    
3,294,272
      
2,100,000
      
2,296
      
4A

   
-
            
5,476,324
      
2,296
      
4A

   
5,475,439
  
                     
(4,115
)
    
4B1
                            
(5,000
)
    
4B2
          
                     
48,500
      
4C

                         
48,500
      
4C

       
                     
4,577
      
4D

   
-
                    
4,577
      
4D

       
                     
23,294
      
4E

   
-
                    
23,294
      
4E

       
                     
7,500
      
4F

   
-
                    
7,500
      
4F
       
Pre-opening expenses
    
57,492
      
-
      
-
              
-
            
57,492
      
-
              
57,492
  
INCOME FROM OPERATIONS
    
1,473,932
      
103,000
      
(108,789
)
            
-
            
1,468,143
      
(107,904
)
            
1,469,028
  
Interest expense
    
52,987
      
24,000
      
7,863
      
4C

   
110,941
      
4K

   
198,714
      
7,863
      
4C

   
87,773
  
                     
429
      
4G

                           
429
      
4G

       
                     
2,494
      
4H

   
-
                      
2,494
      
4H

       
Other expense (income)
    
(98,088
)
    
28,000
      
-
              
-
              
(70,088
)
    
-
              
(70,088
)
INCOME BEFORE INCOME TAXES
    
1,519,033
      
51,000
      
(119,575
)
            
(110,941
)
            
1,339,517
      
(118,690
)
            
1,451,343
  
Provision (benefit) for income taxes
    
353,725
      
33,000
      
(18,871
)
    
4I1
      
(28,845
)
    
4L

   
339,009
      
(18,641
)
    
4I2
      
368,084
  
NET INCOME
  
$
1,165,308
    
$
18,000
    
$
(100,704
)
          
$
(82,096
)
          
$
1,000,508
    
$
(100,049
)
          
$
1,083,259
  
EARNINGS PER COMMON SHARE:
                                                                                
Basic
  
$
14.48
    
$
0.19
                                    
$
12.43
                    
$
11.83
  
Diluted
  
$
14.05
    
$
0.19
                                    
$
12.04
                    
$
11.50
  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
                                                                                
Basic
    
80,468
      
95,000
                                      
80,468
                      
91,593
  
Diluted
    
82,929
      
95,500
                                      
83,104
                      
94,229
  

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. The historical information of DICK’S and Foot Locker is presented in accordance with accounting principles generally accepted in the United States of America.
 
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 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 Balance Sheet is presented as if the Merger had occurred on February 1, 2025, and the Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended February 1, 2025, gives effect to the Merger as if it occurred on February 4, 2024.
 
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 best estimates and are based upon currently available information and certain assumptions that DICK’S 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 following the Merger. In determining the preliminary estimate of fair values of assets acquired and liabilities assumed of Foot Locker, DICK’S 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 Income due to adjustments in the depreciation and amortization expense of the adjusted assets.
 
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 and differences in financial statement presentation compared to the presentation of DICK’S. At the time of preparing the unaudited pro forma condensed combined financial information, other than the adjustments described herein, DICK’S is not aware of any other material differences. However, DICK’S 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 and Foot Locker that when conformed could have a material impact on the unaudited pro forma condensed combined financial information.
 
6
Unaudited Pro Forma Condensed Combined Balance Sheet
  
As of February 1, 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
  
$
401,000
                
$
401,000
  
Accounts receivable, net
        
-
      
156,000
      
(2h
)
    
156,000
  
Income taxes receivable
        
-
                      
-
  
Inventories, net
  
Merchandise inventories
    
1,525,000
                      
1,525,000
  
Prepaid expenses and other current assets
  
Other current assets
    
323,000
      
10,000
      
(2b
)
    
177,000
  
                 
(156,000
)
    
(2h
)
        

Assets held for sale
  
10,000
    
(10,000
 )
 

(2b
 )
 

-
Total Current assets
        
2,259,000
      
-
              
2,259,000
  
Property and equipment, net
  
Property and equipment, net
    
910,000
                      
910,000
  
Operating lease assets
  
Operating lease right-of-use assets
    
2,061,000
                      
2,061,000
  
Intangible assets, net
  
Other intangible assets, net
    
365,000
                      
365,000
  
Goodwill
  
Goodwill
    
759,000
                      
759,000
  
Deferred income taxes
  
Deferred taxes
    
143,000
                      
143,000
  
Other assets
  
Other assets
    
136,000
      
115,000
      
(2c
)
    
251,000
  

Minority investments
  

115,000
    

(115,000
 )
 
(2c
 )
 
-
Total Assets
      
$
6,748,000
      
-
            
$
6,748,000
  
Liabilities and Stockholders' equity
                                    
Current liabilities
                                    
Accounts payable
  
Accounts payable
  
$
378,000
                    
$
378,000
  
Accrued expenses
  
Accrued and other liabilities
    
434,000
      
(48,000
)
    
(2a
)
    
327,000
  
                 
(28,000
)
    
(2f
)
        
                 
(31,000
)
    
(2g
)
        
Operating lease liabilities
  
Current portion of lease obligations
    
507,000
                      
507,000
  

Current portion of debt and obligations under finance leases
  
 
5,000
    

(5,000
 )
 

(2e
 )
 

-
Income taxes payable
        
-
                      
-
  

Liabilities held for sale
  

6,000
    

(6,000
 )
 

(2d
 )
 

-
Deferred revenue and other liabilities
        
-
      
48,000
      
(2a
)
    
118,000
  
                 
6,000
      
(2d
)
        
                 
5,000
      
(2e
)
        
                 
28,000
      
(2f
)
        
                 
31,000
      
(2g
)
        
Total Current liabilities
        
1,330,000
      
-
              
1,330,000
  
Revolving credit borrowings
                                    
Long-term operating lease liabilities
  
Long-term lease obligations
    
1,831,000
                      
1,831,000
  
Senior notes due 2032 and 2052
  
Long-term debt and obligations under finance leases
    
441,000
                      
441,000
  
Other long-term liabilities
  
Other liabilities
    
237,000
                      
237,000
  
Total Long-term liabilities
        
2,509,000
      
-
              
2,509,000
  
Commitments and contingencies
                                    
Stockholders' Equity
                                    
Common stock
  
Common stock
    
802,000
                      
802,000
  
Class B common stock
        
-
                      
-
  
Additional paid-in capital
        
-
      
-
              
-
  
Retained earnings
  
Retained earnings
    
2,494,000
      
-
              
2,494,000
  
Accumulated other comprehensive loss
  
Accumulated other comprehensive loss
    
(383,000
)
                    
(383,000
)
Treasury stock, at cost
  
Treasury stock at cost
    
(4,000
)
                    
(4,000
)
Total stockholders' equity
        
2,909,000
      
-
              
2,909,000
  
Total liabilities and stockholders' equity
      
$
6,748,000
      
-
            
$
6,748,000
  

7
(2a) Reclassification of Customer Loyalty Program from "Accrued and Other Liabilities" to "Deferred revenue and other liabilities".
 
(2b) Reclassification of "Assets held for sale" to "Prepaid expenses and other current assets".
 
(2c) Reclassification of "Minority Investments" to "Other assets".
 
(2d) Reclassification of "Liabilities held for sale" to "Deferred revenue and other liabilities".
 
(2e) Reclassification of "Current portion of debt and obligations under finance leases" to "Deferred revenue and other liabilities".
 
(2f) Reclassification of Gift Card Liability from "Accrued and Other Liabilities" to "Deferred revenue and other liabilities".
 
(2g) Reclassification of Customer Deposit from "Accrued and Other Liabilities" to "Deferred revenue and other liabilities".
 
(2h) Reclassification of Net Receivables from "Other current assets" to "Accounts receivable, net".
 
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
      
(2i
)
  
$
7,988,000
  

 Licensing revenue
  
17,000
    

(17,000
 )
 
(2i
 )
 

-
Cost of goods sold, including occupancy and distribution costs
  
 Cost of sales
    
5,666,000
      
156,000
      
(2j
)
    
5,785,000
  
                 
(37,000
)
    
(2n
)
        
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
      
(2j
)
    
2,100,000
  
                 
5,000
      
(2k
)
        
                 
97,000
      
(2l
)
        
                 
37,000
      
(2n
)
        

Depreciation and amortization
  
202,000
    
(197,000
 )
 
(2j
 )
 

-
                 
(5,000
)
    
(2k
)
        

Impairment and other
 
97,000
    

(97,000
 )
 
(2l
 )
 
-
Pre-opening expenses
                
-
              
-
  
INCOME FROM OPERATIONS
        
103,000
      
-
              
103,000
  
Interest expense
  
Interest expense, net
    
8,000
      
16,000
      
(2m
)
    
24,000
  
Other expense (income)
  
Other expense (income), net
    
44,000
      
(16,000
)
    
(2m
)
    
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
  

8
(2i) Reclassification from "Licensing revenue" to "Net Sales".
 
(2j) 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.
 
(2k) Reclassification of Amortization expense from "Depreciation and amortization" to "Selling, general and administrative expenses".
 
(2l) Reclassification from "Impairment and other" to "Selling, general and administrative expenses".
 
(2m) Reclassification of Interest income from "Interest expense, net" to "Other expense (income)".
 
(2n) Reclassification of buyers' compensation from "Cost of goods sold, including occupancy and distribution costs" to "Selling, general and administrative expenses".
 
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 February 1, 2025 are detailed below:
 
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet:

(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. Refer to the following table for the preliminary estimated fair value of consideration transferred under the Cash Merger Consideration scenario:
 
Scenario A: Cash Merger Consideration
 
(in thousands, except per share data; figures below may not foot due to rounding of shares)
  
As of February 1, 2025
  
Foot Locker's shares outstanding as of May 12, 2025
    
95,248
  
Price per share as per the Merger Agreement (actual amount)
  
$
24.00
  
Cash Consideration paid to shareholders
  
$
2,285,942
  
Add: Settlement of equity awards (1)
  
$
16,087
  
Adjusted Cash consideration paid to shareholders
  
$
2,302,029
  
Add: Pre-combination value of replaced equity awards for employees (2)
  
$
12,966
  
Fair value of consideration transferred
  
$
2,314,995
  

9
(1) Represents the estimated fair value of outstanding Foot Locker’s deferred stock units (“DSUs”), restricted stock units (“RSUs”), performance stock units (“PSUs”) 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’s RSUs (other than non-employee director RSUs) and Foot Locker’s performance stock units (“PSUs”) granted to employees attributable to pre-combination services.
 
(3A2) 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. Refer to the following table for the preliminary estimated fair value of consideration transferred under both the Stock Merger Consideration scenario:
 
Scenario B: Stock Merger Consideration
 
(in thousands, except per share data; figures below may not foot due to rounding of shares)
  
As of February 1, 2025
  
Foot Locker's shares outstanding as of May 12, 2025
    
95,248
  
Exchange Ratio as per the Merger Agreement of DICK’S shares for each share of Foot Locker
    
0.1168
  
Total estimated outstanding shares to be issued by DICK’S
    
11,125
  
DICK'S stock price as on May 28, 2025 (actual amount)
  
$
177.12
  
Share consideration
  
$
1,970,445
  
Add: Accelerated vesting of equity awards to non-employees (1)
    
16,087
  
Add: Pre-combination value of replaced equity awards for employees (2)
    
12,966
  
Fair value of consideration transferred
  
$
1,999,498
  

(1) Represents the estimated fair value of outstanding Foot Locker’s DSUs and RSUs granted to non-employee directors as well as In-the-Money Options granted to employees. These RSUs will accelerate vest and be settled in cash upon closing.
 
(2) Represents the estimated fair value of outstanding Foot Locker’s RSUs (other than non-employee director RSUs) and Foot Locker’s PSUs granted to employees attributable to pre-combination services.
 
(in thousands)
  
As of February 1, 2025
  
Common stock
  
$
111
  
Additional paid-in-capital
    
1,983,300
  
Cash
    
16,087
  
Fair value of consideration transferred
  
$
1,999,498
  

 
The actual value of DICK’S common stock to be issued will depend on the per share price of DICK’S common stock at the closing date of the Merger, and therefore, the actual Stock Merger Consideration will fluctuate with the market price of DICK’s common stock until the Merger is completed. The following table shows the effect of changes in DICK’S stock price and the resulting impact on the estimated Stock Merger Consideration:
 
(in thousands, except per share data)
            
Share Price Sensitivity
  
DICK'S stock price
    
Consideration Transferred
  
As presented
  
$
177.12
      
1,999,498
  
10% increase
  
$
194.83
      
2,196,543
  
10% decrease
  
$
159.41
      
1,802,454
  

10
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 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.
 
   
Scenario A- Cash Merger
Consideration
    
Scenario B- Stock Merger
Consideration
  
(in thousands)
  
Fair value
    
Fair value
  
Cash and cash equivalents
  
$
401,000
    
$
401,000
  
Accounts receivable, net
    
156,000
      
156,000
  
Inventories, net
    
1,525,000
      
1,525,000
  
Prepaid expenses and other current assets
    
177,000
      
177,000
  
Property and equipment, net
    
1,013,000
      
1,013,000
  
Operating lease assets
    
2,133,000
      
2,133,000
  
Deferred income taxes
    
145,137
      
197,137
  
Intangible assets, net
    
220,000
      
20,000
  
Other assets
    
246,556
      
246,556
  
Total assets
  
$
6,016,693
    
$
5,868,693
  
Accounts payable
  
$
378,000
    
$
378,000
  
Accrued expenses
    
389,800
      
389,800
  
Current portion of lease obligations
    
507,000
      
507,000
  
Deferred revenue and other liabilities
    
118,000
      
118,000
  
Long-term debt and obligations under finance leases
    
424,851
      
424,851
  
Long-term operating lease liabilities
    
1,831,000
      
1,831,000
  
Other long-term liabilities
    
237,000
      
237,000
  
Net assets acquired
    
2,131,042
      
1,983,042
  
Goodwill
    
183,953
    
$
16,456
  
Fair value of consideration transferred
  
$
2,314,995
    
$
1,999,498
  

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 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.
 
11
Fair value of Property and Equipment, net:
                  
(In thousands)
  
Carrying Value as on
February 1, 2025
    
Step-up
    
Fair value
  
Land
  
$
3,000
    
$
2,000
    
$
5,000
  
Buildings
    
30,000
      
13,000
      
43,000
  
Furniture, fixtures, equipment
    
364,000
      
46,000
      
410,000
  
Software development costs
    
60,000
      
-
      
60,000
  
Assets under finance leases
    
45,000
      
-
      
45,000
  
Alterations to leased and owned buildings
    
408,000
      
42,000
      
450,000
  
Total property, plant and equipment acquired and pro forma adjustment
  
$
910,000
    
$
103,000
    
$
1,013,000
  

(3C1) Reflects the preliminary estimated asset fair value adjustment to the identifiable intangible assets acquired, primarily consisting of customer relationships, developed technology, and tradenames and trademarks. The fair value of intangible assets is subject to change as the Company finalizes various estimates, inputs and analyses.
 
Scenario A: Cash Merger Consideration
 
Fair value of Intangible assets:
                  
(In thousands)
  
Carrying Value as on
February 1, 2025
    
Step-
up/(down)
    
Fair value
  
Lease acquisition costs
  
$
1,000
    
$
(1,000
)
  
$
-
  
Developed technology
    
-
      
5,000
      
5,000
  
Customer relationships
    
-
      
5,000
      
5,000
  
Trademarks & tradenames
    
364,000
      
(154,000
)
    
210,000
  
Total identifiable intangible assets and pro forma adjustment
  
$
365,000
    
$
(145,000
)
  
$
220,000
  

(3C2) Reflects the preliminary estimated asset fair value adjustment to the identifiable intangible assets acquired, primarily consisting of customer relationships, developed technology, and tradenames and trademarks. The fair value of intangible assets is subject to change as the Company finalizes various estimates, inputs and analyses.
 
Scenario B: Stock Merger Consideration
 
Fair value of Intangible assets:
                  
                   
(In thousands)
  
Carrying Value as on
February 1, 2025
    
Step-down
    
Fair value
  
Lease acquisition costs
  
$
1,000
    
$
(1,000
)
  
$
-
  
Developed technology
    
-
      
-
      
-
  
Customer relationships
    
-
      
-
      
-
  
Trademarks & tradenames
    
364,000
      
(344,000
)
    
20,000
  
Total identifiable intangible assets and pro forma adjustment
  
$
365,000
    
$
(345,000
)
  
$
20,000
  

(3D) Reflects one-time non-recurring transaction-related costs of approximately $56.4 million incurred prior to, or concurrent with, the closing of the Merger including bank fees, legal fees, consulting fees, structuring & upfront fees paid for senior bridge term loans, exchange fee related to senior note exchange and other transaction costs estimated to be incurred by DICK’S. No amount was incurred or accrued for as of the balance sheet date.
 
12
(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’s existing Senior Notes; a $3.9 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 Senior Notes; and a $4.4 million decrease to Other assets against the increase in Goodwill related to the reversal of outstanding deferred financing cost balance of Revolving credit facility.
 
(3F) Reflects the elimination of Foot Locker’s historical equity.
 
(3G) Reflects the cash payment for the severance benefits total $23.3 million including severance pay and the acceleration of replaced awards by executives.
 
(3H) Reflects increase in the liabilities assumed of $7.5 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 $55.3 million related to estimated seller’s transaction cost and associated payment at close of the Merger.
 
(3J) Reflects the fair value adjustment of $20.0 million related to Foot Locker’s outstanding Senior Notes assumed and not extinguished as of the closing of the Merger.
 
(3K) Reflects a preliminary purchase accounting adjustment of $72.0 million to record favorable contractual lease balance when compared to market terms.
 
(3L1) Represents a $2.1 million adjustment to deferred tax assets under Scenario A 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 Transaction. 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 Transaction. These changes in estimates could be material.
 
(3L2) Represents a $54.1 million adjustment to deferred tax assets under Scenario B 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 Component 1 Goodwill which resets as a result of the Transaction. 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 Transaction. These changes in estimates could be material.
 
(3M1, 3M2) Represents the adjustment to goodwill based on the purchase price allocation in respect of both Scenario A and B, as described above.
 
(in thousands)
  
Scenario A- Cash Merger
Consideration
    
Scenario B- Stock Merger
Consideration
  
Goodwill resulting from the Merger
  
$
183,953
    
$
16,456
  
Less: Elimination of Foot Locker’s historical Goodwill
    
(759,000
)
    
(759,000
)
Pro forma adjustment
  
$
(575,047
)
  
$
(742,544
)

13
Financing Adjustments

(3N) Reflects the adjustment related to the net proceeds received from the Debt Financing issued as part of the financing for the Cash Merger Consideration in Scenario A, as described above.
 
(in thousands)
  
As of February 1, 2025
  
Proceeds from the unsecured senior notes
  
$
1,732,000
  
Payment of financing costs
    
(12,793
)
Pro forma adjustment
  
$
1,719,207
  
 
Note 4. Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations
 
The adjustments included in the Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended February 1, 2025 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
    
Depreciation expense for the
year ended February 1, 2025
  
Land
    
n/a
    
$
5,000
    
$
-
  
Buildings
  
Maximum of 50
      
43,000
      
1,313
  
Furniture, fixtures, equipment
    
3-10
      
410,000
      
138,000
  
Software development costs
    
2-5
      
60,000
      
30,000
  
Assets under finance leases
    
7-10
      
45,000
      
5,000
  
Alterations to leased and owned buildings
    
7
      
450,000
      
34,000
  
Total property and equipment acquired
          
$
1,013,000
    
$
208,313
  
Less: Historical depreciation expense
                    
(197,280
)
Pro forma adjustment for incremental depreciation expense
                  
$
11,033
  

(4B1) 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.
 
Scenario A: Cash Merger Consideration
 
(In thousands)
  
Useful Life
    
Fair Value
    
Amortization expense for the year
ended February 1, 2025
  
Lease acquisition costs
    
n/a
    
$
-
    
$
-
  
Developed technology
    
10
      
5,000
      
500
  
Customer relationships
    
13
      
5,000
      
385
  
Trademarks & tradenames
    
n/a
      
210,000
      
-
  
Total identifiable intangible assets
          
$
220,000
      
885
  
Less: Historical Amortization expense
                    
5,000
  
Pro forma adjustment for incremental amortization expense
                  
$
(4,115
)

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(4B2) 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.
 
Scenario B: Stock Merger Consideration
 
(In thousands)
  
Useful Life
    
Fair Value
    
Amortization expense for the year
ended February 1, 2025
  
Lease acquisition costs
    
n/a
    
$
-
    
$
-
  
Developed technology
    
10
      
-
      
-
  
Customer relationships
    
13
      
-
      
-
  
Trademarks & tradenames
    
n/a
      
20,000
      
-
  
Total identifiable intangible assets
          
$
20,000
    
$
-
  
Less: Historical Amortization expense
                    
5,000
  
Pro forma adjustment for incremental amortization expense
                  
$
(5,000
)

(4C) Reflects estimated non-recurring transaction-related expenses of $56.4 million incurred by DICK’S, including legal, accounting and regulatory fees directly associated with the Merger. Out of these expenses, $48.5 million are charged under Selling, general and administrative expenses and $7.9 million pertaining to structuring & upfront fee on senior bridge term loans 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 of $14.5 million and recognition of new stock-based compensation expense of $19.1 million (net amount of $4.6 million) for the post-combination portion of the Foot Locker’s RSUs and PSUs that are expected to be replaced by DICK’S RSUs and PSUs, respectively, at the closing of the Merger.
 
(4E) Represents the adjustment to DICK’S selling, general and administrative expenses to record a one-time post- combination expense related to paid severance costs of $23.3 million for executives of Foot Locker, including cash severance and the acceleration of unvested Foot Locker’s RSUs and PSUs held by executives.
 
(4F) The adjustment represents $7.5 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 $0.4 million out of the total of $2.0 million, incurred on the same.
 
(4H) Reflects the adjustment to record interest expense for accretion of the preliminary fair value of the Foot Locker’s outstanding Senior Notes assumed and not extinguished as of the closing of the Merger. It also reflects the reversal of historical amortization of transaction fees related to both Senior Notes and Revolving credit facility, since it was already being recorded in the income statement of Foot Locker.
 
(4I1) Reflects estimated income tax impact of $18.9 million related to the transaction accounting adjustments. Tax-related adjustments are based upon an estimated statutory tax rate of 26% and include the tax impacts of certain non-deductible compensation and transaction costs. 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 Transaction.
 
(4I2) Reflects estimated income tax impact of $18.6 million related to the transaction accounting adjustments. Tax-related adjustments are based upon an estimated statutory tax rate of 26% and include the tax impacts of certain non-deductible compensation and transaction costs. 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 Transaction.
 
15
(4J) Represents an adjustment of $18.0 million to record amortization expense for favorable contractual lease term when compared to market.
 
Financing Adjustments

(4K) Reflects the adjustment related to the interest expense and amortization of issuance costs related to the Debt Financing assumed as part of financing the Cash Merger Consideration in Scenario A, as described above.
 
(in thousands)
  
For the year ended February 1,
2025
  
Interest expense on unsecured senior notes
  
$
110,365
  
Amortization of debt issuance costs on unsecured senior notes
    
576
  
Pro forma adjustment
  
$
110,941
  

(4L) Reflects estimated income tax impact of $28.8 million related to the financing adjustments. 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 Transaction.
 
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.
 
(in thousands, except per share count and per share data)
  
Scenario A- Cash Merger
Consideration
    
Scenario B- Stock Merger
Consideration
  
Numerator (basic and diluted):
  
For the year ended February 1,
2025
    
For the year ended February
1, 2025
  
Pro forma net income attributable to common shares
  
$
1,000,508
    
$
1,083,259
  
Denominator:
                
Weighted-average number of common shares outstanding - basic
    
80,468
      
91,593
  
Weighted-average number of common shares outstanding - diluted
    
83,104
      
94,229
  
Pro forma earnings per share:
                
Basic
  
$
12.43
    
$
11.83
  
Diluted
  
$
12.04
    
$
11.50
  

(in thousands)
  
Scenario A- Cash Merger
Consideration
    
Scenario B- Stock Merger
Consideration
  
   
For the year ended
February 1, 2025
    
For the year ended
February 1, 2025
  
Denominator for Basic
            
Historical weighted-average number of common shares outstanding
    
80,468
      
80,468
  
Shares of DICK'S common stock issued as consideration transferred
    
-
      
11,125
  
Total weighted average common shares outstanding (basic):
    
80,468
      
91,593
  
                 
Denominator for Diluted
                
Historical weighted-average number of common shares outstanding
    
82,929
      
82,929
  
Shares of DICK'S common stock issued as consideration transferred
    
-
      
11,125
  
 Replacement of Foot Locker's employee PSU and RSU awards
    
175
      
175
  
Total weighted average common shares outstanding (diluted):
    
83,104
      
94,229
  


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