Big Lots 2013 Annual Report Download - page 198

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NOTE 3 – BANK CREDIT FACILITY
On July 22, 2011, we entered into a $700 million five-year unsecured credit facility and, on May 30, 2013, we entered into an
amendment of the credit facility that extended its expiration from July 22, 2016 to May 30, 2018 (“2011 Credit Agreement”).
The 2011 Credit Agreement replaced the $500 million three-year unsecured credit facility we entered into on April 28, 2009
(“2009 Credit Agreement”). We did not incur any material termination penalties in connection with the termination of the 2009
Credit Agreement. In connection with our entry into the 2011 Credit Agreement, we paid bank fees and other expenses in the
aggregate amount of $3.0 million, which are being amortized over the term of the agreement. In connection with the
amendment of the 2011 Credit Agreement, we paid additional bank fees and other expenses in the aggregate amount of $0.9
million, which are being amortized over the term of the amended agreement.
Borrowings under the 2011 Credit Agreement are available for general corporate purposes and working capital. The 2011
Credit Agreement includes a $30 million swing loan sublimit and a $150 million letter of credit sublimit. The interest rates,
pricing and fees under the 2011 Credit Agreement fluctuate based on our debt rating. The 2011 Credit Agreement allows us to
select our interest rate for each borrowing from multiple interest rate options. The interest rate options are generally derived
from the prime rate or LIBOR. We may prepay revolving loans made under the 2011 Credit Agreement. The 2011 Credit
Agreement contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and
investments, as well as the maintenance of two financial ratios – a leverage ratio and a fixed charge coverage ratio. A violation
of any of the covenants could result in a default under the 2011 Credit Agreement that would permit the lenders to restrict our
ability to further access the 2011 Credit Agreement for loans and letters of credit and require the immediate repayment of any
outstanding loans under the 2011 Credit Agreement. At February 1, 2014, we had $77.0 million of borrowings outstanding
under the 2011 Credit Agreement and $5.6 million was committed to outstanding letters of credit, leaving $617.4 million
available under the 2011 Credit Agreement.
NOTE 4 – FAIR VALUE MEASUREMENTS
In connection with our nonqualified deferred compensation plan, we had mutual fund investments of $21.2 million and $20.7
million at February 1, 2014 and February 2, 2013, respectively, which were recorded in other assets. These investments were
classified as trading securities and were recorded at their fair value. The fair values of mutual fund investments were Level 1
valuations under the fair value hierarchy because each fund’s quoted market value per share was available in an active market.
The fair values of our long-term obligations are estimated based on the quoted market prices for the same or similar issues and
the current interest rates offered for similar instruments. These fair value measurements are classified as Level 2 within the fair
value hierarchy. Given the variable rate features and relatively short maturity of the instruments underlying our long-term
obligations, the carrying value of these instruments approximates the fair value.
NOTE 5 – LEASES
Leased property consisted primarily of 1,515 of our retail stores, 0.5 million square feet of warehouse space, and certain
transportation, information technology and other office equipment. Many of the store leases obligate us to pay for our
applicable portion of real estate taxes, CAM, and property insurance. Certain store leases provide for contingent rents, have
rent escalations, and have tenant allowances or other lease incentives. Many of our leases contain provisions for options to
renew or extend the original term for additional periods.
Total rent expense, including real estate taxes, CAM, and property insurance, charged to continuing operations for operating
leases consisted of the following:
(In thousands) 2013 2012 2011
Minimum leases $329,654 $309,526 $ 284,697
Contingent leases 391 460 637
Total rent expense $330,045 $309,986 $ 285,334