Dick's Sporting Goods 2009 Annual Report Download - page 77

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Certain of the agreements pertaining to long-term debt contain financial and other restrictive covenants, none of which are more
restrictive than those of the Credit Agreement as discussed herein.
Scheduled principal payments on other long-term debt as of January 30, 2010 are as follows (in thousands):
Fiscal Year
2010................... $ 77
2011................... 83
2012................... 88
2013................... 94
2014................... 101
Thereafter . . . . . . . . . . . . . . . . . 456
$899
Capital Lease Obligations — The Company leases two buildings from the estate of a former stockholder, who is related to current
stockholders of the Company, under a capital lease entered into May 1, 1986 which expires in April 2021. In addition, the Company
has a capital lease for a store location with a fixed interest rate of 10.6% that matures in 2024. The gross and net carrying values
of assets under capital leases are approximately $10.5 million and $5.9 million, respectively, as of January 30, 2010 and
$8.2 million and $3.4 million, respectively, as of January 31, 2009.
Scheduled lease payments under capital lease obligations as of January 30, 2010 are as follows (in thousands):
Fiscal Year
2010................. $ 1,804
2011................. 1,804
2012................. 1,804
2013................. 1,602
2014................. 1,437
Thereafter. . . . . . . . . . . . . . . 9,207
17,658
Less: amounts representing interest . . . . . . . . . . . . . (7,277)
Present value of net scheduled lease payments . . . . . 10,381
Less: amounts due in one year . . . . . . . . . . . . . . . . . (901)
$ 9,480
Financing Lease Obligation — During fiscal 2008, the Company entered into a lease agreement for a new corporate headquarters
building that it began occupying in January 2010. The Company advanced a portion of the funds needed to prepare the site and
construct the building, which resulted in the Company being considered the owner of the building during the construction period.
The remaining project costs have been financed by the developer except for any project scope changes requested by the Company.
The Company has a purchase option for the building, exercisable by the Company at various times beginning in March 2012. Due
to this purchase option, the Company is deemed to have continuing involvement and the transaction qualifies as a financing lease
under sale-leaseback accounting and therefore represents a debt obligation to the Company. The debt obligation recognized by
the Company at the completion of the construction period represents the Company’s obligation to the lessor upon exercise of the
purchase option. Monthly rent payments for the premises will be recognized as interest expense on the Company’s Consolidated
Statements of Operations, reflecting an implicit interest rate of approximately 8.5%.
The building is included in property and equipment, net and will be depreciated over a 40 year life.
Dick’s Sporting Goods, Inc. ¬2009 Annual Report 75
DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)