Big Lots 2007 Annual Report Download - page 159

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 10 — Commitments and Contingencies (Continued)
We have purchase obligations for 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. We paid $28.3 million, $36.1 million, and $44.0 million related
to this commitment during 2007, 2006, and 2005, respectively. We are not required to meet any periodic
minimum purchase requirements under this commitment. The term of the commitment extends until the
purchase requirement is satisfied. 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.
Note 11 — Discontinued operations
We report discontinued operations upon disposition of a component of our business when the cash flows have
been or will be eliminated from our ongoing operations. As a result, our discontinued operations for 2007, 2006,
and 2005, were comprised of the following:
2007 2006 2005
(In thousands)
Closed stores ................................................. $ (905) $ (2,659) $(41,130)
KB Toys matters .............................................. 12,912 18,531 (569)
Total pretax income (loss) ..................................... $12,007 $15,872 $(41,699)
Closed Stores
In 2005, we determined that the results of 130 stores closed in 2005 should be reported as discontinued
operations for all periods presented. The table below identifies the significant components of income (loss) from
discontinued operations for these closed stores for 2007, 2006, and 2005, respectively.
2007 2006 2005
(In thousands)
Net sales ...................................................... $ — $ — $215,154
Gross margin .................................................. — — 74,109
Operating loss .................................................. $ (905) $ (2,659) $ (41,130)
In 2007 and 2006, closed stores operating loss is primarily comprised of exit-related costs, utilities, and security
expenses on leased properties with remaining terms and accretion on the lease termination costs of $0.2 million
and $0.4 million, respectively. As discussed in more detail in note 8 to our consolidated financial statements,
a pretax $0.7 million pension settlement charge was recognized in loss from discontinued operations in 2006.
Additionally, in the fourth quarter of 2006, we reviewed the fair value of our lease termination cost liability
and, as a result of achieving a higher level of savings than was previously estimated, we recognized a pretax
$1.3 million reduction in the liability resulting in a partial reversal of charges incurred in 2005. In 2005, our
results of discontinued operations for closed stores included the net sales and associated costs which were
directly related to and specifically identifiable with these stores and exit-related pretax losses in the amount of
$43.6 million for the write-down of property and inventory, severance and benefits, and lease termination costs.