LEASES

12 Months Ended

Jan. 28, 2012

NOTE 6. LEASES

We have entered into capital leases for certain property and technology hardware. At January 28, 2012, the total capital lease obligation was $2.2 million, of which $0.2 million was classified as a short-term liability and included in short-term debt and capital lease obligations and $2.0 million was classified as a long-term liability as obligations under capital leases in our consolidated balance sheet. At January 29, 2011, the total capital lease obligation was $2.6 million, of which $0.3 million was classified as a short-term liability and included in short-term debt and capital lease obligations and $2.3 million was classified as a long-term liability as obligations under capital leases in our consolidated balance sheet. The cost basis of total assets under capital lease obligations at January 28, 2012 and January 29, 2011 was $2.4 million and $2.7 million, respectively, with accumulated amortization at January 28, 2012 and January 29, 2011 of $0.3 million each.

We lease the majority of our retail sporting goods stores under non-cancelable operating leases. The leases typically provide for terms of five to ten years with options to extend at our discretion. Many of our leases contain scheduled increases in annual rent payments and the majority of our leases also require us to pay maintenance, insurance and real estate taxes. Additionally, many of the lease agreements contain tenant improvement allowances, rent holidays and/or rent escalation clauses (contingent rentals) based on net sales for the location. For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, we use the date of initial possession to begin amortization, which is generally when we enter the space and begin to make improvements in preparation of our intended use.

Most of our retail store leases contain provisions that allow for early termination of the lease if certain pre-determined annual sales levels are not met. Generally, these provisions allow the lease to be terminated between the third and fifth year of the lease. Should the lease be terminated under these provisions, in some cases, the unamortized portion of any landlord allowances related to that property would be payable to the landlord.

We also lease certain office equipment and transportation equipment under non-cancelable operating leases having initial terms of more than one year.

In February 1996, we entered into a sale-leaseback transaction to finance our distribution center and office facilities. In December 1999, the related operating lease was amended to include the Fiscal 2000 expansion of these facilities. The amended lease rate is $0.9 million per year and can increase annually with the Consumer Price Index. This lease will expire in December 2014. Future minimum lease payments under this non-cancelable lease aggregate approximately $2.6 million. The transaction is also subject to quarterly financial covenants based on certain ratios.

During Fiscal 2012, we increased our lease commitments by a net of 34 retail stores, each having initial lease termination dates between September 2015 and April 2022 as well as various office and transportation equipment. At January 28, 2012, the future minimum lease payments under capital leases and the present value of such payments, and the future minimum lease payments under our operating leases, excluding maintenance, insurance and real estate taxes, including the net 34 operating leases added during Fiscal 2012, were as follows (in thousands):

	Capital		Operating		Total
Fiscal 2013	$	366	$	43,374	$	43,740
Fiscal 2014		366		36,393		36,759
Fiscal 2015		366		26,563		26,929
Fiscal 2016		369		17,865		18,234
Fiscal 2017		379		11,711		12,090
Thereafter		1,444		16,828		18,272
Total minimum lease payments		3,290		152,734		156,024
Less amount representing interest		1,045		-		1,045
Present value of total minimum lease payments	$	2,245	$	152,734	$	154,979

Rental expense for all operating leases consisted of the following (in thousands):

	Fiscal Year Ended
	January 28,		January 29,		January 30,
	2012		2011		2010
Minimum rentals	$	37,971	$	36,294	$	35,455
Contingent rentals		5,767		5,220		4,165
	$	43,738	$	41,514	$	39,620

- Definition

The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing.

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