Big Lots 2008 Annual Report Download - page 138

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The table below summarizes the activity of our exit liabilities and the remaining balances at January 31, 2009 as
a result of the 130 store closures in 2005:
Severance
and
Benefits
Lease
Termination
Costs Total
(In thousands)
Remaining Obligations at January 28, 2006........................ $ 1,761 $ 18,201 $ 19,962
Settlement savings ......................................... — (1,346) (1,346)
Accretion expense ......................................... — 411 411
Payments ................................................ (1,761) (11,329) (13,090)
Remaining Obligations at February 3, 2007........................ — 5,937 5,937
Settlement savings ......................................... — (115) (115)
Accretion expense ......................................... — 181 181
Payments ................................................ — (3,523) (3,523)
Remaining Obligations at February 2, 2008........................ — 2,480 2,480
Settlement savings ......................................... — (81) (81)
Accretion expense ......................................... — 90 90
Payments ................................................ — (1,619) (1,619)
Remaining Obligations at January 31, 2009 ........................ $ — $ 870 $ 870
Included in payments is sublease income of $0.3 million, $0.3 million, and $0.1 million in 2008, 2007, and
2006, respectively.
As of January 31, 2009, we had seven closed stores with leases that had not yet been terminated or subleased.
Future cash outlays under these store closure obligations are anticipated to be $0.5 million in 2009, $0.3 million
in 2010, and $0.1 million in 2011.
KB Toys Matters
We acquired the KB Toys business from Melville Corporation (now known as CVS New York, Inc., and
together with its subsidiaries “CVS”) in May 1996. As part of that acquisition, we provided, among other
things, an indemnity to CVS with respect to any losses resulting from KB Toys’ failure to pay all monies due
and owing under any KB Toys lease or mortgage obligation. While we controlled the KB Toys business, we
provided guarantees with respect to a limited number of additional KB Toys store leases. We sold the KB
Toys business to KB Acquisition Corp. (“KBAC”), an affiliate of Bain Capital, pursuant to a Stock Purchase
Agreement. KBAC similarly agreed to indemnify us with respect to all lease and mortgage obligations. These
guarantee and lease obligations are collectively referred to as the “KB Lease Obligations.”
On January 14, 2004, KBAC and certain affiliated entities (collectively referred to as “KB-I”) filed for
bankruptcy protection pursuant to Chapter 11 of title 11 of the United States Code. In connection with the
2004 bankruptcy, KB-I rejected 226 store leases and two distribution center leases for which we believed we
may have guarantee or indemnification obligations (collectively referred to as the “KB-I Bankruptcy Lease
Obligations”). We estimated and recorded pretax charges for estimated KB-I Bankruptcy Lease Obligations
in loss from discontinued operations of $24.4 million and $8.6 million in 2003 and 2004, respectively. During
2005, we reversed approximately $0.4 million of the KB-I Bankruptcy Lease Obligations originally providing
for professional fees that were no longer expected to be incurred. During 2006, we reversed approximately $14.5
million of the KB-I Bankruptcy Lease Obligations to reflect the estimated amount expected to be paid by us.
We based this revision of the KB-I Bankruptcy Lease Obligations on the number of demand notices that we
had received from landlords and used information received from KB-I, the bankruptcy trust, and our own lease
records which date back to when we owned the KB Toys business. In the second quarter of 2007, we recorded
Note 11 — Discontinued Operations (Continued)