Big Lots 2008 Annual Report Download - page 100

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(3) Operating lease obligations include, among other items, leases for retail stores, warehouse space, data
center, offices, and certain computer and other business equipment. The future minimum commitments
for store, data center, office, and warehouse space operating leases are $663.5 million. For a discussion
of leases, see note 5 to the accompanying consolidated financial statements. Many of the store lease
obligations require us to pay for our applicable portion of common area maintenance costs (“CAM”), real
estate taxes, and property insurance. In connection with our store lease obligations, we estimated that
future obligations for CAM, real estate taxes, and property insurance were $215.8 million at January 31,
2009. We have made certain assumptions and estimates in order to account for our contractual obligations
relative to CAM, real estate taxes, and property insurance. Those assumptions and estimates include, but
are not limited to: use of historical data to estimate our future obligations; calculation of our obligations
based on comparable store averages where no historical data is available for particular leasehold; and
assumptions related to average expected increases over historical data. The remaining lease obligation of
$8.4 million relates primarily to operating leases for computer and other business equipment.
(4) For purposes of the lease and purchase obligation disclosures, we have assumed that we will make all
payments scheduled or reasonably estimated to be made under those obligations that have a determinable
expiration date, and we disregarded the possibility that such obligations may be prematurely terminated
or extended, whether automatically by the terms of the obligation or by agreement between us and the
counterparty, due to the speculative nature of premature termination or extension. Where an operating lease
or purchase obligation is subject to a month-to-month term or another automatically renewing term, we
disclosed in the table our minimum commitment under such obligation, such as one month in the case of a
month-to-month obligation and the then-current term in the case of another automatically renewing term,
due to the uncertainty of future decisions to exercise options to extend or terminate any existing leases.
(5) Purchase obligations include outstanding purchase orders for merchandise issued in the ordinary course
of our business that are valued at $410.2 million, the entirety of which represents obligations due within
one year of January 31, 2009. In addition, we have a purchase commitment for future inventory purchases
totaling $167.4 million at January 31, 2009. While we are not required to meet any periodic minimum
purchase requirements under this commitment, for purposes of this tabular disclosure, we have included
the value of the purchases that we anticipate making during each of the reported periods, as purchases
that will count toward our fulfillment of the aggregate obligation. The remaining $138.8 million of
purchase obligations is primarily related to distribution and transportation, information technology, print
advertising, energy procurement, and other store security, supply, and maintenance commitments.
(6) Other long-term liabilities include $30.2 million for expected pension plan contributions, our $11.0 million
obligation related to our nonqualified deferred compensation plan, $11.6 million for unrecognized tax
benefits, and $0.9 million for closed store lease termination costs. Pension contributions are equal to
expected benefit payments for the nonqualified plan plus expected contributions to the qualified plan
using actuarial estimates and assuming that we only make the minimum required contributions (see note
8 to the accompanying consolidated financial statements for additional information about our employee
benefit plans). We have estimated the payments due by period for the nonqualified deferred compensation
plan based on an average of historical distributions. We have included unrecognized tax benefits of $3.8
million for payments expected in 2009 and $7.8 million of FIN No. 48 timing-related items anticipated to
reverse in 2009. Unrecognized tax benefits in the amount of $24.4 million have been excluded from the
table because we are unable to make a reasonably reliable estimate of the timing of future payments. Our
closed store lease termination cost payments are based on contractual terms.
(7) The obligations disclosed in this table are exclusive of the contingent liabilities, guarantees, and
indemnities related to KB Toys. For further discussion, see note 11 to the accompanying consolidated
financial statements.
Off-Balance Sheet Arrangements
For a discussion of the KB Bankruptcy Lease Obligations, see note 11 to the accompanying consolidated financial
statements. Because the KB Toys business filed for bankruptcy again in December 2008 and liquidated all of its
store operations, we accrued a contingent liability on our balance sheet in the amount of $5.0 million for 31 KB Toys