Big Lots 2008 Annual Report Download - page 99

31
As discussed further in this Form 10-K, Item 1A. Risk Factors, the recent events that have occurred in the
financial and credit markets continue to add a high level of uncertainty to factors which may affect our results
of operations, capital resources, and liquidity, as well as credit availability to our vendors and customers.
Based in part on discussions we have had with our key banking relationships, we currently believe that we
have the ability to obtain financing beyond the termination of the 2004 Credit Agreement. Based on current
market conditions and discussions that we have had with our key banking relationships, we may not be able to
replace the entire $500 million of availability with a new agreement. However, we expect to be able to obtain
a sufficient level of financing such that our normal operations are not impacted. Because interest rate credit
spreads have widened since we entered into the 2004 Credit Agreement, we may pay higher interest rates in
the future under a new bank credit agreement; however, the current LIBOR rate, which is a base rate available
to us under the 2004 Credit Agreement and expected to be available to us under a new bank credit agreement
(prior to the application of the applicable credit spread), is approximately 4% lower than the peak LIBOR rate
in 2008. We do not expect the higher credit spread under the new bank agreement to have a material adverse
effect on our operating results in 2009. Based on historical and planned financial results, we believe that we
have or, if necessary, have the ability to obtain, adequate resources to fund ongoing and seasonal working
capital requirements, proposed capital expenditures, new projects, and currently maturing obligations. Other
than the recent events that have occurred in the financial and credit markets and the scheduled termination of
the 2004 Credit Agreement in October 2009, we are not currently aware of any other trends, events, demands,
commitments, or uncertainties which reasonably can be expected to have a material impact on our capital
resources or liquidity.
Contractual Obligations
The following table summarizes payments due under our contractual obligations at January 31, 2009:
Payments Due by Period (1)
Tot a l
Less than
1 year 1 to 3 years 3 to 5 years
More than
5 years
(In thousands)
Obligations under bank credit facility (2) . . . $ 61,700 $ 61,700 $ — $ — $ —
Operating lease obligations (3) (4) ......... 887,709 251,168 365,309 199,646 71,586
Capital lease obligations (4) .............. 6,389 2,758 3,301 330 —
Purchase obligations (4) (5) ............... 716,449 549,347 88,653 59,076 19,373
Other long-term liabilities (6) ............ 53,745 14,714 10,364 11,467 17,200
Total contractual obligations (7) ......... $1,725,992 $ 879,687 $ 467,627 $ 270,519 $ 108,159
(1) The disclosure of contractual obligations in this table is based on assumptions and estimates that we
believe to be reasonable as of the date of this report. Those assumptions and estimates may prove to be
inaccurate; consequently, the amounts provided in the table may differ materially from those amounts
that we ultimately incur. Variables that may cause the stated amounts to vary from those actually incurred
include, but are not limited to: the termination of a contractual obligation prior to its stated or anticipated
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) Obligations under bank credit facility consist of the borrowings outstanding under the 2004 Credit
Agreement. In addition, we had outstanding letters of credit totaling $53.2 million at January 31, 2009.
Approximately $49.5 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.