Harris Teeter 2007 Annual Report Download - page 23

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19
to borrow up to an aggregate amount of $41.6 million from two major U.S. life insurance companies utilizing
certain insurance assets as collateral. In the normal course of business, the Company will continue to evaluate
other financing opportunities based on the Company’s needs and market conditions.
Covenants in certain of the Company’s long-term debt agreements limit the total indebtedness that the
Company may incur. Management believes that the limit on indebtedness does not significantly restrict the
Company’s ability to meet future liquidity requirements.
Contractual Obligations and Commercial Commitments
The Company has assumed various financial obligations and commitments in the normal course of
its operations and financing activities. Financial obligations are considered to represent known future cash
payments that the Company is required to make under existing contractual arrangements, such as debt and lease
agreements. Management expects that cash provided by operations and other sources of liquidity, such as the
Company’s Credit Agreement, will be sufficient to meet these obligations on a short and long-term basis. The
following table represents the scheduled maturities of the Company’s contractual obligations as of September
30, 2007 (in thousands):
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
Long-Term Debt (1) . . . . . . . . . . . . . . . . . . . . . . . . $ 225,065 $ 8,263 $ 17,594 $ 98,699 $ 100,509
Operating Leases (1) (2) . . . . . . . . . . . . . . . . . . . . . 1,376,321 81,296 178,722 177,495 938,808
Capital Lease Obligations (1) (2) . . . . . . . . . . . . . . . 39,327 272 1,329 1,585 36,141
Purchase Obligations – Fixed Assets . . . . . . . . . 72,991 70,991 2,000 — —
Purchase Obligations – Inventory . . . . . . . . . . . . 787 787 — — —
Purchase Obligations –
Service Contracts/Other . . . . . . . . . . . . . . . . . 19,833 8,596 9,764 1,473 —
Other (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,981 1,557 3,200 3,195 10,029
Total Contractual Cash Obligations . . . . . . . . . . $ 1,752,305 $ 171,762 $ 212,609 $ 282,447 $ 1,085,487
(1) For a more detailed description of the obligations refer to the Notes entitled “Leases” and “Long-Term
Debt” of the Notes to Consolidated Financial Statements in Item 8 hereof.
(2) Represents the minimum rents payable and includes leases associated with closed stores. The obligations
related to the closed store leases are discussed below. Amounts are not offset by expected sublease income
and do not include various contingent liabilities associated with assigned leases as discussed below.
(3) Represents the projected cash payments associated with certain deferred compensation contracts. The net
present value of these obligations is recorded by the Company and included with other long-term liabilities
in the Company’s consolidated balance sheets.
In connection with the closing of certain store locations, Harris Teeter has assigned leases to several other
merchants with recourse. These leases expire over the next 14 years, and the future minimum lease payments of
approximately $66.9 million, in the aggregate, over that future period have been assumed by these merchants.
In the highly unlikely event, in management’s opinion based on the current operations and credit worthiness of
the assignees, that all such contingent obligations would be payable by Harris Teeter, the approximate aggregate
amounts due by year would be as follows: $9.2 million in fiscal 2008 (29 stores), $8.4 million in fiscal 2009 (28
stores), $7.4 million in fiscal 2010 (22 stores), $7.0 million in fiscal 2011 (18 stores), $6.4 million in fiscal 2012
(16 stores) and $28.5 million in aggregate during all remaining years thereafter.
The Company utilizes various standby letters of credit and bonds as required from time to time by certain
programs, most significantly for self-insured programs such as workers compensation and various casualty
insurance. These letters of credit and bonds do not represent additional obligations of the Company since
the underlying liabilities are recorded as insurance reserves and included with other current liabilities on the