44 Notes to Consolidated Financial Statements Franklin Covey 2000 Annual Report 7. DEFERRED COMPENSATION LIABILITY 8. LEASE OBLIGATIONS Capital Leases 9. ADVERTISING Operating Leases 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. 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 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. Future minimum lease payments for equipment held under capital lease arrangements as of August 31, 2000 were as follows (in thousands): 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: 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. payments under operating leases at August 31, 2000  (in thousands): 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. YEAR ENDING  AUGUST 31, YEAR ENDING AUGUST 31, YEAR ENDING  AUGUST 31, 2001 $  592 2002 392 Total future minimum lease payments 98 4 Less amount representing interest (6 4 ) Present value of future minimum lease payments 920 Less current portion (540) $  380 2001 $ 1,792 2002 1,845 2003 1,901 2004 1,958 2005 2,017 Thereafter 3,309 $12,822 2001 $12,702 2002 11,032 2003 10,231 2004 8,672 2005 5,610 Thereafter 13,980 $62,227