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## 7. DEFERRED COMPENSATION LIABILITY 

During fiscal 2000, the Company established a deferred compensation plan for certain key officers and employees that provides the opportunity to defer a portion of their compensation until a later date. Deferred amounts are held in a “Rabbi Trust”, which invests in various mutual funds and/or the Company’s common stock as directed by the participants. The trust assets are recorded as a long-term asset in the accompanying fiscal 2000 consoli- dated balance sheet because such amounts are subject to the claims of creditors. The corresponding deferred compensation liability represents the amounts deferred by participants plus any earnings on the trust assets. 

## 8. LEASE OBLIGATIONS 

## Capital Leases 

Future minimum lease payments for equipment held under capital lease arrangements as of August 31, 2000 were as follows (in thousands): 

<img src='content_image/125050.jpg'>

Total assets held by the Company under capital lease arrangements were $4.0 million with accumulated amortization of $2.2 million as of August 31, 2000. Amortization of capital lease assets is included in depre- ciation and amortization expense in the accompanying consolidated income statements. 

## Operating Leases 

The Company leases certain retail store and office locations under noncancelable operating lease agree- ments with remaining terms of one to ten years. The following table summarizes future minimum lease 

payments under operating leases at August 31, 2000 (in thousands): 

<img src='content_image/125052.jpg'>

Total rental expense for leases under operating lease agreements was $17.4 million, $17.6 million, and $16.8 million, for the years ended August 31, 2000, 1999, and 1998, respectively. 

As part of its restructuring plan (Note 2), the Company exited certain leased office space in Provo, Utah during fiscal 2000. In connection with leaving the office space, the Company obtained a noncancelable sublease agree- ment for the majority of the Company’s remaining lease term on the buildings. Future minimum lease payments due to the Company from the subleasee as of August 31, 2000 were as follows: 

<img src='content_image/125051.jpg'>

## 9. ADVERTISING 

Costs for newspaper, television, radio, and other advertising are expensed as incurred. Direct response advertising costs consist primarily of printing and mailing costs for catalogs and seminar mailers that are charged to expense over the period of projected benefit, not to exceed twelve months. Total advertising costs were $37.2 million, $33.0 million, and $26.7 million for the years ended August 31, 2000, 1999, and 1998, respectively. Prepaid catalog and seminar mailer costs reported in other current assets were $5.1 million and $5.7 million at August 31, 2000 and 1999, respectively. 

