Saks Fifth Avenue 2011 Annual Report Download - page 68

SAKS INCORPORATED & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The Company made interest payments of $31,681, $35,286, and $36,388, of which $955, $721, and $758 was
capitalized into property and equipment during 2011, 2010, and 2009, respectively.
NOTE 7: COMMITMENTS AND CONTINGENCIES
Operating Leases and Other Purchase Commitments
The Company leases certain property and equipment under various non-cancelable capital and operating
leases. The leases provide for monthly fixed amount rentals or contingent rentals based upon sales in excess of
stated amounts and normally require the Company to pay real estate taxes, insurance, common area
maintenance costs and other occupancy costs. Generally, the leases have primary terms ranging from 20 to 30
years and include renewal options ranging from 5 to 20 years.
At January 28, 2012, future minimum rental commitments under capital leases and non-cancelable operating
leases consisted of the following:
Capital Leases
Operating
Leases
2012 .......................................................... $ 13,229 $ 57,930
2013 .......................................................... 13,132 53,084
2014 .......................................................... 12,251 45,782
2015 .......................................................... 10,070 42,256
2016 .......................................................... 9,403 38,857
Thereafter ...................................................... 24,013 121,598
Total minimum lease payments .................................. $ 82,098 $ 359,507
Less: portion representing interest .................................. (29,178)
Total capital lease obligations .................................... $ 52,920
Total rental expense for operating leases was $99,184, $98,501, and $101,756, during 2011, 2010, and 2009,
respectively, including contingent rent of $16,054, $14,284, and $13,301, respectively, and common area
maintenance costs of $11,919, $11,611, and $12,299, respectively.
As of January 28, 2012, the Company may be required to deliver shares and/or cash to holders of the
convertible notes described in Note 6 prior to the stated maturity date of said notes based on the value of the
Company’s common stock.
In the normal course of business, the Company purchases merchandise under purchase commitments; enters
into contractual commitments with real estate developers and construction companies for new store
construction and store remodeling; and maintains contracts for various information technology,
telecommunications, maintenance and other services. Commitments for purchasing merchandise generally do
not extend beyond six months and may be cancelable several weeks prior to the vendor shipping the
merchandise. Contractual commitments for the construction and remodeling of stores are typically lump sum or
cost plus construction contracts. Contracts to purchase various services are generally less than two year
commitments and are cancelable within several weeks notice.
From time to time the Company has issued guarantees to landlords under leases of stores operated by its
subsidiaries. Certain of these stores were sold in connection with the Saks Department Store Group and the
Northern Department Store Group transactions which occurred in July 2005 and March 2006, respectively. If
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