Big Lots 2007 Annual Report Download - page 119

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expiration; fees or damages incurred as a result of the premature termination or breach of a contractual
obligation; the acquisition of more or less services or goods under a contractual obligation than are
anticipated by us as of the date of this report; fluctuations in third party fees, governmental charges, or
market rates that we are obligated to pay under contracts we have with certain vendors; and the exercise of
renewal options under, or the automatic renewal of, contracts that provide for the same.
(2) Long-term debt obligations consist of the borrowings outstanding under the Credit Agreement. We had
outstanding letters of credit totaling $58.4 million at February 2, 2008. Approximately $57.3 million of the
outstanding letters of credit represent stand-by letters of credit and we do not expect to meet conditions
requiring significant cash payments on these letters of credit; accordingly, they have been excluded from
this table. The remaining outstanding letters of credit represent commercial letters of credit whereby
the related obligation is included in Purchase Obligations. For a further discussion, see note 3 to the
accompanying consolidated financial statements.
(3) Operating lease obligations include, among other items, leases for retail stores, warehouse space, offices,
and certain computer and other business equipment. The future minimum commitments for store
and warehouse space operating leases are $657.9 million. For a discussion of leases, see note 5 to the
accompanying consolidated financial statements. Many of the store lease obligations require us to pay
for our applicable portion of common area maintenance costs (“CAM”), real estate taxes, and property
insurance. In connection with our store lease obligations, we estimated that future obligations for CAM,
real estate taxes, and property insurance were $208.9 million at February 2, 2008. We have made certain
assumptions and estimates in order to account for our contractual obligations relative to CAM, real estate
taxes, and property insurance. Those assumptions and estimates include, but are not limited to: use of
historical data to estimate our future obligations; calculation of our obligations based on comparable store
averages where no historical data is available for a particular leasehold; and assumptions related to average
expected increases over historical data. The remaining lease obligation of $11.6 million relates primarily to
operating leases for computer and other business equipment.
(4) For purposes of the lease and purchase obligation disclosures, we have assumed that we will make all
payments scheduled or reasonably estimated to be made under those obligations that have a determinable
expiration date, and we disregarded the possibility that such obligations may be prematurely terminated
or extended, whether automatically by the terms of the obligation or by agreement between us and the
counterparty, due to the speculative nature of premature termination or extension. Where an operating
lease or purchase obligation is subject to a month-to-month term or another automatically renewing term,
we disclosed our minimum commitment under such obligation, such as one month in the case of a month-
to-month obligation and the then-current term in the case of another automatically renewing term, due to
the uncertainty of future decisions to exercise options to extend or terminate any existing leases.
(5) Purchase obligations include outstanding purchase orders for merchandise issued in the ordinary course
of our business that are valued at $399.1 million, the entirety of which represents obligations due within
one year of February 2, 2008. In addition, we have a purchase commitment for future inventory purchases
totaling $198.9 million at February 2, 2008. While we are not required to meet any periodic minimum
purchase requirements under this commitment, for purposes of this tabular disclosure, we have included
the value of the purchases that we anticipate making during each of the reported periods, as purchases
that will count toward our fulfillment of the aggregate obligation. The remaining $149.9 million of
purchase obligations is primarily related to distribution and transportation, information technology, print
advertising, and other store security, supply, and maintenance commitments.
(6) Other long-term liabilities include $23.8 million for expected pension plan contributions, our $13.9 million
obligation related to our nonqualified deferred compensation plan, $12.3 million for unrecognized tax
benefits, and $2.5 million for closed store lease termination costs. Pension contributions are equal to
expected benefit payments for the nonqualified plan plus expected contributions to the qualified plan
using actuarial estimates and assuming that we only make the minimum required contributions (see note
8 to the accompanying consolidated financial statements for additional information about our employee
benefit plans). We have estimated the payments due by period for the nonqualified deferred compensation
plan based on an average of historical distributions. We have included unrecognized tax benefits of $4.6
million for payments expected in 2008 and $7.7 million of FIN No. 48 timing-related items anticipated to