Harris Teeter 2012 Annual Report Download - page 39

7. LEASES
The Company leases certain equipment under agreements expiring during the next 2 years and leases most of its stores
under agreements that expire during the next 16 years. It is expected that certain store leases will be renewed by exercising
options or replaced by leases of other properties. Most store leases provide for additional rentals based on sales, and certain
store facilities are sublet under leases expiring during the next 9 years. Certain leases also contain rent escalation clauses (step
rents) that require additional rental amounts in the later years of the term. Rent expense for the last three fiscal years was as
follows (in thousands):
2012 2011 2010
Minimum, net of sublease income $ 99,289 $94,901 $94,336
Contingent 1,378 1,252 1,401
Total $100,667 $96,153 $95,737
Future minimum lease commitments (excluding leases assigned - see below) and total minimum sublease rental income
to be received under non-cancelable subleases as of October 2, 2012 were as follows (in thousands):
Operating Capital
Fiscal Year Leases Subleases Leases
2013 $ 105,054 $(1,225) $ 12,535
2014 106,686 (1,157) 12,632
2015 108,817 (789) 12,635
2016 106,122 (520) 12,685
2017 102,298 (386) 12,731
Later years 1,020,776 (31) 142,011
Total minimum lease obligations (receivables) $1,549,753 $(4,108) 205,229
Amount representing interest (94,742)
Present value of net minimum obligation (included with long-term debt) $110,487
In connection with the closing of certain store locations, the Company has assigned leases to several sub-tenants with
recourse. These leases expire over the next 9 years and the future minimum lease payments totaling $32,880,000 over this period
have been assumed by these sub-tenants.
8. LONG-TERM DEBT
On January 30, 2012, the Company amended and restated its then-existing credit agreement that provided financing under
a $100 million term loan and a $350 million revolving line of credit. The prior credit agreement was due to expire in December
of 2012 and the Company had previously repaid $20 million of the term loan prior to the closing of the amended credit facility.
The amended credit facility contains a revolving line of credit that provides for financing up to $350 million through its
termination date on January 30, 2017. In connection with the closing of the amended credit agreement, the Company repaid
the remaining $80 million term loan under the prior credit facility utilizing $40 million of cash and $40 million of borrowings
under the new revolver. The amended credit agreement provides for an optional increase of the revolving credit facility by an
additional amount of up to $100 million (if the existing or new lenders agree to assume the additional commitments) and two
one-year maturity extension options, both of which require consent of certain of the lenders. Outstanding borrowings under the
amended credit agreement bear interest at a variable rate, at the Company’s option at: (a) an alternate base rate, based on a
reference to: rates on federal funds transactions with members of the Federal Reserve System, the prime rate, or the LIBOR
Market Index Rate in effect on the interest determination date; (b) the LIBOR Market Index Rate; or (c) a LIBOR Rate, each
plus an applicable margin as determined by the administrative agent in accordance with the terms of the amended credit
agreement. The amount which may be borrowed from time to time and the applicable margin to the referenced interest rate
are each dependent on a leverage factor. The leverage factor is based on a ratio of rent-adjusted consolidated funded debt divided
HARRIS TEETER SUPERMARKETS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
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