Family Dollar 2009 Annual Report Download - page 58

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The Company has 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 either specified future
dates, or upon separation from service or death. The Company does not make contributions to this plan or
guarantee earnings.
9. Commitments and Contingencies:
Operating leases and other contractual obligations
Rental expenses on all operating leases, both cancelable and non-cancelable, for fiscal 2009, fiscal 2008 and
fiscal 2007 were as follows:
(in thousands) 2009 2008 2007
Minimum rentals, net of minor sublease rentals ............. $382,530 $371,639 $337,796
Contingent rentals .................................... 5,444 4,553 5,306
$387,974 $376,192 $343,102
The following table shows the Company’s obligations and commitments to make future payments under
contractual obligations, including future minimum rental payments required under operating leases that have
initial or remaining non-cancelable lease terms in excess of one year at the end of fiscal 2009:
Payments Due During the Period Ending
(in thousands)
Total
August
2010
August
2011
August
2012
August
2013
August
2014 ThereafterContractual Obligations
Long-term debt ................... $ 250,000 $ — $ — $ 16,200 $ 16,200 $ 16,200 $201,400
Interest ......................... 78,529 13,387 13,387 12,609 11,760 10,912 16,474
Merchandise letters of credit ........ 125,871 125,871—————
Operating leases .................. 1,414,094 329,022 289,628 241,683 191,842 138,307 223,612
Construction obligations ........... 2,817 2,817—————
Minimum royalties(1) .............. 13,950 2,350 2,550 2,750 2,800 2,800 700
Total ........................... $1,885,261 $473,447 $305,565 $273,242 $222,602 $168,219 $442,186
(1) Minimum royalty payments related to an exclusive agreement to sell certain branded merchandise.
At the end of fiscal 2009, approximately $50.5 million of the merchandise letters of credit were included in
accounts payable on the Company’s Consolidated Balance Sheet. Most of the Company’s operating leases
provide the Company with an option to extend the term of the lease at designated rates.
During the first quarter of fiscal 2008, the Company adopted FIN 48, which clarifies the accounting for income
taxes recognized in an enterprise’s financial statements. In accordance with FIN 48, the Company recorded $39.4
million in liabilities related to its uncertain tax positions as of August 29, 2009. At this time the Company cannot
reasonably determine the timing of any payments related to these liabilities, except for $1.7 million which were
classified as current liabilities and may become payable within the next 12 months. See Note 7 above for more
information on the Company’s adoption of FIN 48.
The following table shows the Company’s other commercial commitments at the end of fiscal 2009:
Total Amounts
CommittedOther Commercial Commitments (in thousands)
Standby letters of credit .......................................... $202,288
Surety bonds ................................................... 56,876
Total ..................................................... $259,164
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