Dick's Sporting Goods 2008 Annual Report Download - page 72

We have non-qualifi ed deferred compensation plans for highly compensated employees whose contributions are limited under
qualifi ed defi ned contribution plans. Amounts contributed and deferred under the deferred compensation plans are credited
or charged with the performance of investment options offered under the plans and elected by the participants. In the event of
bankruptcy, the assets of these plans are available to satisfy the claims of general creditors. The liability for compensation deferred
under the Company’s plans was $8.1 million and $1.8 million at January 31, 2009, and February 2, 2008, respectively, and is included
in long-term liabilities. Total expense recorded under these plans was $0.5 million, $5.5 million and $0.1 million for fi scal 2008, 2007
and 2006, respectively.
17. Commitments and Contingencies
The Company enters into licensing agreements for the exclusive or preferential rights to use certain trademarks extending through
2020. Under specifi c agreements, the Company is obligated to pay annual guaranteed minimum royalties. The aggregate amount of
required payments at January 31, 2009 is as follows:
Fiscal Year
(In thousands)
2009 $ 9,456
2010 10,790
2011 12,115
2012 14,935
2013 5,396
Thereafter 35,248
$ 87,940
Also, the Company is required to pay additional royalties when the royalties that are based on the qualifi ed purchases or retail sales
(depending on the agreement) exceed the guaranteed minimum. The aggregate payments made under these agreements requiring
minimum guaranteed contractual amounts were $9.7 million, $1.9 million and $0.7 million during fi scal 2008, 2007 and 2006, respectively.
The Company also has certain naming rights, marketing, and other commitments extending through 2026 of $94.5 million.
Payments under these commitments were $25.2 million for the 52 weeks ended January 31, 2009. Payments under these
commitments are scheduled to be made as follows: 2009, $29.6 million; 2010, $11.7 million; 2011, $5.7 million; 2012, $6.0 million;
2013, $3.2 million; thereafter, $38.3 million.
During fi scal 2008, the Company entered into a lease agreement for a new corporate headquarters building that it expects to occupy
beginning in February 2010. The Company expects this lease to be classifi ed as a capital lease obligation. Payments scheduled to be
made under this lease agreement are $12.1 million annually in 2010 through 2013. Scheduled payments thereafter total $272.5 million
through February 2035.
The Company is involved in legal proceedings incidental to the normal conduct of its business. Although the outcome of any pending
legal proceedings cannot be predicted with certainty, management believes that adequate insurance coverage is maintained and
that the ultimate resolution of these matters will not have a material adverse effect on the Company’s liquidity, fi nancial position or
results of operations.
18. Fair Value Measurements
The Company adopted SFAS 157 as of February 3, 2008 for its fi nancial assets and liabilities. SFAS 157 defi nes fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (an exit price). SFAS 157 outlines a valuation framework and creates a fair value hierarchy in order to increase the
consistency and comparability of fair value measurements and the related disclosures and prioritizes the inputs used in measuring
fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop
its own assumptions.
DICK’S SPORTING GOODS, INC. 2008 ANNUAL REPORT
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