Dick's Sporting Goods 2014 Annual Report Download - page 78

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DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Construction Allowances – All of the Company's store locations are leased. The Company may receive reimbursement from a
landlord for some of the cost of the structure, subject to satisfactory fulfillment of applicable lease provisions. These
reimbursements may be referred to as tenant allowances, construction allowances or landlord reimbursements ("construction
allowances").
The Company's accounting for construction allowances differs if the Company is deemed to be the owner of the asset during
the construction period. Some of the Company's leases have a cap on the construction allowance, which places the Company at
risk for cost overruns and causes the Company to be deemed the owner during the construction period. In cases where the
Company is deemed to be the owner during the construction period, a sale and leaseback of the asset occurs when construction
of the asset is complete and the lease term begins, if relevant sale-leaseback accounting criteria are met. Any gain or loss from
the transaction is included within deferred revenue and other liabilities on the Consolidated Balance Sheets and deferred and
amortized as rent expense on a straight-line basis over the term of the lease. The Company reports the amount of cash received
for the construction allowance as construction allowance receipts within the financing activities section of its Consolidated
Statements of Cash Flows when such allowances are received prior to completion of the sale-leaseback transaction. The
Company reports the amount of cash received from construction allowances as proceeds from sale leaseback transactions
within the investing activities section of its Consolidated Statements of Cash Flows when such amounts are received after the
sale-leaseback accounting criteria have been achieved.
In instances where the Company is not deemed to be the owner during the construction period, reimbursement from a landlord
for tenant improvements is classified as an incentive and included within deferred revenue and other liabilities on the
Consolidated Balance Sheets. The deferred rent credit is amortized as rent expense on a straight-line basis over the term of the
lease. Landlord reimbursements from these transactions are included in cash flows from operating activities as a change in
deferred construction allowances.
Leases – Escalating rent payments, rent abatements and rent holidays are considered in the calculation of minimum lease
payments in the Company's capital lease tests and in determining straight-line rent expense for operating leases. The Company
records any difference between the straight-line rent amount and amounts payable under the lease as part of deferred rent within
long-term deferred revenue and other liabilities on the Consolidated Balance Sheets.
Contingent payments based upon sales and future increases determined by inflation related indices cannot be estimated at the
inception of the lease and accordingly, are charged to operations as incurred. The Company records contingent rent within
accrued expenses on the Consolidated Balance Sheets.
Recently Issued Accounting Pronouncement – In May 2014, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers." This update requires an entity to
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. Additionally, the update (1) specifies the
accounting for some costs to obtain or fulfill a contract with a customer and (2) expands disclosure requirements related to
revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for annual reporting periods beginning
after December 15, 2016, including interim periods within that reporting period, and permits the use of either the retrospective
or cumulative effect transition method. Early application is not permitted. The Company is currently evaluating the impact of
the adoption of ASU 2014-09 on the Company’s Consolidated Financial Statements.
2. Goodwill and Other Intangible Assets
At January 31, 2015 and February 1, 2014, the Company reported goodwill of $200.6 million net of accumulated impairment
charges of $111.3 million. There was no change in the carrying value of goodwill during fiscal 2014 or fiscal 2013. No
impairment charges were recorded for goodwill in fiscal 2014, 2013 or 2012.
The Company had indefinite-lived and finite-lived intangible assets of $103.8 million and $6.3 million, respectively, as of
January 31, 2015 and $89.5 million and $8.8 million, respectively, as of February 1, 2014. During fiscal 2014, the Company
recorded a $12.4 million non-cash impairment charge for a trademark and trade name related to the Company's golf
restructuring to reduce the carrying value of the respective assets to their estimated fair value. The impairment charge is
included within selling, general and administrative expenses on the Consolidated Statement of Income. No impairment charges
were recorded for the Company's intangible assets in fiscal 2013 or 2012.