Family Dollar 2012 Annual Report Download - page 38

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Contractual Obligations and Other Commercial Commitments
The following table shows our obligations and commitments to make future payments under contractual
obligations at the end of fiscal 2012.
Payments Due During the Period Ending
(in thousands)
Contractual Obligations Total
August
2013
August
2014
August
2015
August
2016
August
2017 Thereafter
Long-term debt ......... $ 533,800 $ 16,200 $ 16,200 $ 16,200 $185,200 $ — $ 300,000
Interest ............... 166,291 26,760 25,911 25,063 21,057 15,000 52,500
Merchandise letters of
credit ............... 118,306 118,306 ———— —
Operating leases ........ 2,745,273 431,076 389,754 341,291 291,793 244,843 1,046,516
Construction
obligations .......... 95,625 95,625 ———— —
Minimum royalties(1) .... 6,300 2,800 2,800 700 — — —
Total ................. $3,665,595 $690,767 $434,665 $383,254 $498,050 $259,843 $1,399,016
(1) Minimum royalty payments related to an exclusive agreement to sell certain branded merchandise.
At the end of fiscal 2012, approximately $21.2 million of the merchandise letters of credit were included in
accounts payable and accrued liabilities on our Consolidated Balance Sheets. Most of our operating leases
provide us with an option to extend the term of the lease at designated rates. See Part I—Item 2—“Properties” in
this Report.
As of August 25, 2012, we had $22.4 million in liabilities related to our uncertain tax positions. At this time,
we cannot reasonably determine the timing of any payments related to these liabilities, except for $8.3 million,
which were classified as current liabilities and may become payable within the next 12 months. See Note 9 to the
Consolidated Financial Statements included in this Report for more information on our tax liabilities.
The following table shows our other commercial commitments at the end of fiscal 2012.
Other Commercial Commitments (in thousands)
Total Amounts
Committed
Standby letters of credit .......................................... $26,054
Surety bonds ................................................... 46,529
Total ..................................................... $72,583
A substantial portion of the outstanding amount of standby letters of credit (which are primarily renewed on
an annual basis) is used as surety for future premium and deductible payments to our workers’ compensation and
general liability insurance carrier. We accrue for these future payment liabilities as described in the “Critical
Accounting Policies” section of this discussion.
We issue inventory purchase orders in the normal course of business, which represent purchase
authorizations that can be canceled. We do not consider purchase orders to be firm inventory commitments;
therefore, they are excluded from the table above. If we choose to cancel a purchase order, we may be obligated
to reimburse the vendor for unrecoverable outlays incurred prior to cancellation.
Off Balance Sheet Arrangements
The Company does not have any material off balance sheet arrangements other than the operating leases
included in the “Contractual Obligations and Other Commercial Commitments” section above.
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