Dick's Sporting Goods 2008 Annual Report Download - page 65

10. Operating Leases
The Company leases substantially all of its stores, offi ce facilities, distribution centers and equipment, under noncancelable operating
leases that expire at various dates through 2039. Certain of the store lease agreements contain renewal options for additional periods
of fi ve-to-ten years and contain certain rent escalation clauses. The lease agreements provide primarily for the payment of minimum
annual rentals, costs of utilities, property taxes, maintenance, common areas and insurance, and in some cases contingent rent stated
as a percentage of gross sales over certain base amounts. Rent expense under these operating leases was approximately $319.2 million,
$267.5 million and $205.8 million for fi scal 2008, 2007 and 2006, respectively. The Company entered into sale-leaseback transactions
related to store fi xtures, buildings and equipment that resulted in cash receipts of $44.9 million, $28.4 million and $32.5 million for
fi scal 2008, 2007 and 2006, respectively.
Scheduled lease payments due (including lease commitments for 32 stores not yet opened at January 31, 2009) under noncancelable
operating leases as of January 31, 2009 are as follows:
Fiscal Year
(In thousands)
2009 $ 360,532
2010 369,937
2011 360,940
2012 348,479
2013 342,322
Thereafter 1,878,352
$ 3,660,562
The Company has subleases related to certain of its operating lease agreements. The Company recognized sublease rental income
of $1.1 million, $1.1 million and $1.2 million for fi scal 2008, 2007 and 2006, respectively.
11. Stock-Based Compensation and Employee Stock Plans
The Company has the availability to grant stock options to purchase common stock under Dick’s Sporting Goods, Inc. 2002 Stock
Option Plan and the Golf Galaxy, Inc. 2004 Incentive Plan (the “Plans”). The Company also has an employee stock purchase plan
(“ESPP”) which provides for eligible employees to purchase shares of the Company’s common stock.
The following represents total stock based compensation and ESPP expense recognized in the Consolidated Statements of
Operations:
2008 2007 2006
(In thousands)
Stock option expense $ 20,345 $ 26,387 $ 23,075
Restricted stock expense 3,465 1,198 —
ESPP expense 1,790 1,454 1,228
Total stock-based compensation expense $ 25,600 $ 29,039 $ 24,303
Total related tax benefi t $ 6,514 $ 10,982 $ 9,277
Stock Option Plans – The Company grants stock options to purchase common stock under the Plans. Stock options generally vest
over four years in 25% increments from the date of grant and expire 7 to 10 years from date of grant. As of January 31, 2009, there
were 12,638,397 shares of common stock available for issuance pursuant to future stock option grants.
The fair value of each stock option granted is estimated on the grant date using the Black-Scholes (“Black Scholes”) option valuation
model. The assumptions used to calculate the fair value of options granted are evaluated and revised, as necessary, to refl ect
market conditions and the Company’s experience. These options are expensed on a straight-line basis over the vesting period, which
is considered to be the requisite service period. Compensation expense is recognized only for those options expected to vest, with
forfeitures estimated at the date of grant based on the Company’s historical experience and future expectations.
DICK’S SPORTING GOODS, INC. 2008 ANNUAL REPORT 63