Family Dollar 2003 Annual Report Download - page 32

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6. Employee Benefit Plans:
Incentive compensation plan:
The Company has an incentive profit-sharing plan whereby, at the discretion
of the Board of Directors, the Company may pay certain employees and officers
an aggregate amount not to exceed 5% of the Company’s consolidated income
before income taxes. Expenses under the profit-sharing plan were $7.3 million
in fiscal 2003, $6.3 million in fiscal 2002 and $2.7 million in fiscal 2001.
Compensation deferral plans:
The Company has a voluntary compensation deferral plan, under Section 401(k)
of the Internal Revenue Code, available to eligible employees. At the discretion of
the Board of Directors, the Company makes contributions to the plan which are
allocated to participants, and in which they become vested, in accordance with for-
mulas and schedules defined by the plan. Company expenses for contributions to
the plan were $2.3 million in fiscal 2003, $2.0 million in fiscal 2002 and $1.7 mil-
lion in fiscal 2001. In fiscal 2003, the Company adopted a deferred compensation
plan to provide certain key management employees the ability to defer a portion
of their base compensation and bonuses. The plan is an unfunded nonqualified
plan. The deferred amounts and earnings thereon are payable to participants,
or designated beneficiaries, at specified future dates, upon retirement or death.
The Company does not make contributions to this plan or guarantee earnings.
7. Commitments and Contingencies:
Operating leases:
Except for its executive offices and primary distribution centers, the Company
generally conducts its operations from leased facilities. Normally, store real
estate leases are for initial terms of from five to ten years with multiple
renewal options for additional five-year periods. Certain leases provide for
contingent rental payments based upon a percentage of store sales. The
Company also has long-term leases for equipment generally with lease
terms of five years or less.
Rental expenses on all operating leases, both cancellable and non-cancellable,
for each of the three years in the period ended August 30, 2003 were as follows
(In thousands):
2003 2002 2001
Minimum rentals, net of minor sublease rentals $207,732 $180,318 $154,654
Contingent rentals 5,134 5,054 4,295
$212,866 $185,372 $158,949
The following table shows the Company’s obligations and commitments as of August 30, 2003, to make future payments under contractual obligations, including future
minimum rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year (In thousands):
Payments Due During One Year Fiscal Period Ending
August August August August August There-
Contractual Obligations Total 2004 2005 2006 2007 2008 after
Merchandise letters of credit $ 56,430 $ 56,430 $ — $ — $ — $ — $ —
Operating leases 796,565 190,840 167,434 136,444 102,997 67,204 131,646
Construction obligations 17,044 17,044 — — — — —
Total Contractual Cash Obligations $870,039 $264,314 $167,434 $136,444 $102,997 $67,204 $131,646
Family Dollar Stores, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
Ye ars Ended August 30, 2003, August 31, 2002 and September 1, 2001