Big Lots 2012 Annual Report Download - page 113

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incurred include, but are not limited to: the termination of a contractual obligation prior to its stated or
anticipated expiration; fees or damages incurred as a result of the premature termination or breach of a
contractual obligation; the acquisition of more or less services or goods under a contractual obligation than
are anticipated by us as of the date of this report; fluctuations in third party fees, governmental charges, or
market rates that we are obligated to pay under contracts we have with certain vendors; and the exercise of
renewal options under, or the automatic renewal of, contracts that provide for the same.
(2) Obligations under the bank credit facility consist of the borrowings outstanding under the 2011 Credit
Agreement, and the associated accrued interest of $0.2 million. In addition, we had outstanding letters
of credit totaling $56.5 million at February 2, 2013. Approximately $54.4 million of the outstanding
letters of credit represent stand-by letters of credit and we do not expect to meet the conditions requiring
significant cash payments on these letters of credit; accordingly, they have been excluded from this table.
The remaining $2.1 million of outstanding letters of credit represent commercial letters of credit whereby
the related obligation is included in the purchase obligations. For a further discussion, see note 3 to the
accompanying consolidated financial statements.
(3) Operating lease obligations include, among other items, leases for retail stores, warehouse space, offices,
and certain computer and other business equipment. The future minimum commitments for retail store,
office, and warehouse space operating leases are $1,005.2 million. For a further 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 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 $296.4 million at February 2, 2013. 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 a particular leasehold; and assumptions related to average expected increases over
historical data. The remaining lease obligation of $7.1 million relates primarily to operating leases for
computer and other business equipment, including data center related costs.
(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 included 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 $489.9 million, the entirety of which represents obligations due within
one year of February 2, 2013. In addition, we have a purchase commitment for future inventory purchases
totaling $60.9 million at February 2, 2013. While we are not required to meet any periodic minimum
purchase requirements under this commitment, we have included, for purposes of this tabular disclosure,
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 $117.8 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 $21.2 million for obligations related to our nonqualified deferred
compensation plan, $7.3 million for expected contributions to the Pension Plan and our nonqualified,
unfunded supplemental defined benefit pension plan (“Supplemental Pension Plan”), $3.0 million for
unrecognized tax benefits, and $0.7 million for closed store lease termination costs related to stores closed
in 2012. Pension contributions are equal to expected benefit payments for the nonqualified plan plus