Dick's Sporting Goods 2003 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2003 Dick's Sporting Goods annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 56

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56

dks 03ar 42
Income Taxes The Company utilizes the asset and liability method of accounting for income taxes under the
provisions of SFAS No. 109, “Accounting for Income Taxes,” and provides deferred income taxes for temporary
differences between the amounts reported for assets and liabilities for financial statement purposes and for income
tax reporting purposes.
Revenue Recognition Revenue from retail sales is recognized at the point-of-sale. Revenue from cash received for
gift cards is deferred, and the revenue is recognized upon the redemption of the gift card. Sales are recorded net of
estimated returns. Revenue from layaway sales is recognized upon receipt of final payment from the customer.
Advertising Costs Production costs of advertising and the costs to run the advertisements are expensed the first time
the advertisement takes place. Advertising expense was approximately $54,445,000, $42,568,000 and $37,176,000 for
fiscal 2003, 2002, and 2001, respectively.
Vendor Allowances Vendor allowances include allowances, rebates and cooperative advertising funds received from
vendors. These funds are determined for each fiscal year and the majority are based on various quantitative contract
terms. Amounts expected to be received from vendors relating to the purchase of merchandise inventories are
recognized as a reduction of cost of goods sold as the merchandise is sold. Amounts that represent a reimbursement
of costs incurred, such as advertising, are recorded as a reduction to the related expense in the period that the related
expense is incurred. The Company records an estimate of earned allowances based on the latest projected purchase
volumes and advertising forecasts. On an annual basis, the Company confirms earned allowances with vendors to
determine the amounts are recorded in accordance with the terms of the contract.
Fair Value of Financial Instruments The Company has financial instruments which include long-term debt and
revolving debt. The carrying amounts of the Company’s debt instruments approximate their fair value, estimated using
the Company’s current incremental borrowing rates for similar types of borrowing arrangements.
Segment Information The Company is a specialty retailer that offers a broad range of products in its specialty retail
stores in the Eastern United States. Given the economic characteristics of the store formats, the similar nature of the
products sold, the type of customer, and method of distribution, the continuing operations of the Company are one
reportable segment.
2. PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and consist of the following as of the end of the fiscal periods:
2003 2002
(Dollars in thousands)
Buildings $2,752 $2,752
Leasehold improvements 92,921 71,542
Furniture, fixtures and equipment 81,398 69,638
177,071 143,932
Less accumulated depreciation and amortization (76,106) (63,823)
Net property and equipment $100,965 $80,109
3. ACCRUED EXPENSES
Accrued expenses consist of the following as of the end of the fiscal periods:
2003 2002
(Dollars in thousands)
Accrued payroll, withholdings and benefits $ 28,338 $ 25,541
Other accrued expenses 43,752 33,707
$ 72,090 $ 59,248