Acquisitions and Goodwill

9 Months Ended

Nov. 30, 2013

Business Combinations [Abstract]

Acquisitions and Goodwill

Acquisitions and Goodwill

On March 29, 2012, GCPI SR LLC (“GCPI”) made a $10.0 million strategic investment in Running Specialty. The Company remained majority owner with a 51% ownership. GCPI has the right to “put” and the Company has the right to “call” after March 4, 2017, under certain circumstances, the remaining 49% interest in Running Specialty at an agreed upon price approximating fair value. Also, as part of the transaction, GCPI issued to the Company a $4.0 million related-party promissory note, which is collateralized with GCPI’s interest in Running Specialty, due March 31, 2021 or earlier depending on certain stipulated events in the control of GCPI. The promissory note calls for interest payments based in part on a fixed rate and in part on participation in the value of other investments held by GCPI. The balance of the promissory note is $4.1 million, at November 30, 2013, and includes accrued interest and has been netted against the “redeemable noncontrolling interest.”

During the thirty-nine weeks ended November 30, 2013, the Company completed three individually immaterial acquisitions for total consideration of $11.8 million, net of cash acquired, which were funded through the Company's existing cash. In addition to the cash consideration, the transactions included aggregate contingent consideration with an estimated fair value of $0.5 million, which is included within other long-term liabilities. The Company determined the estimated fair value based on discounted cash flow analyses and estimates made by management. The entities acquired operated 13 specialty running shops in Ohio, Kentucky, Indiana and Colorado. In connection with these acquisitions, the Company recorded goodwill of $10.0 million during the thirty-nine weeks ended November 30, 2013. Goodwill is deductible for U.S. federal income tax purposes.

The Company allocated the aggregated purchase price based upon the tangible and intangible assets acquired, net of liabilities. The allocation of the purchase price for acquisitions is detailed below (in thousands):

	Allocation of Purchase Price
Goodwill	$	10,035
Tangible assets, net of liabilities	2,246
Contingent consideration	(450		)
Total purchase price	$	11,831

During the fifty-two weeks ended March 2, 2013, the Company completed two individually immaterial acquisitions for total consideration of $4.2 million, net of cash acquired, which operated six specialty running shops in Texas and Virginia. In connection with these acquisitions, the company recorded goodwill of $5.4 million during the fifty-two weeks ended March 2, 2013.

The Company allocated the aggregated purchase price based upon the tangible and intangible assets acquired, net of liabilities. The allocation of the purchase price is detailed below (in thousands):

	Allocation of Purchase Price
Goodwill	$	5,385
Tangible assets, net of liabilities	299
Contingent consideration	(1,453		)
Total purchase price	$	4,231

A reconciliation of goodwill is detailed below (in thousands):

	Goodwill
Balance as of March 3, 2012:	$	8,503
Acquisitions	5,385
Balance as of March 2, 2013:	13,888
Acquisitions	10,035
Other	112
Balance as of November 30, 2013:	$	24,035