Harris Teeter 2009 Annual Report Download - page 26

Download and view the complete annual report

Please find page 26 of the 2009 Harris Teeter annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 119

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119

22
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 Revolving Credit Facility and new sources of financing available to the Company, 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 27, 2009 (in thousands):
Tota l
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
Long-Term Debt (1) . . . . . . . . . . . . . . . . . . . . . . . . $ 339,377 $ 18,698 $ 29,857 $168,882 $ 121,940
Operating Leases (1) (2) ...................... 1,467,802 93,876 191,287 193,898 988,741
Capital Lease Obligations (1) (2) . . . . . . . . . . . . . . . 202,353 9,651 21,349 21,436 149,917
Purchase Obligations – Fixed Assets .......... 39,326 39,326 — — —
Purchase Obligations – Inventory . . . . . . . . . . . . 948 948 — — —
Purchase Obligations –
Service Contracts/Other . . . . . . . . . . . . . . . . . 17,030 7,119 7,754 2,157 —
Unrecognized Tax Liability (3) . . . . . . . . . . . . . . . 5,003 1,967 3,036 — —
Other (4) ................................. 14,833 1,609 3,195 2,957 7,072
Total Contractual Cash Obligations ........... $2,086,672 $173,194 $256,478 $389,330 $ 1,267,670
(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. Amounts represent total expected
payments of principal and interest. Payment on variable interest debt is estimated using an interest rate of
2.0% applied to the outstanding balance.
(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) For a more detailed description of the obligation refer to the Note entitled “Income Taxes” of the Notes to
Consolidated Financial Statements in Item 8 hereof. The timing of payment, if any, for the unrecognized
tax liability is not certain. However, we believe that we could possibly reach a settlement or resolution on
the tax issues within the next three years.
(4) 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 sub-
tenants with recourse. These leases expire over the next 12 years, and the future minimum lease payments of
approximately $51.2 million, in the aggregate, over that future period have been assumed by these sub-tenants.
In the 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: $8.0 million in fiscal 2010 (25 stores), $7.6 million in fiscal 2011
(22 stores), $7.3 million in fiscal 2012 (21 stores), $6.1 million in fiscal 2013 (17 stores), $5.2 million in fiscal
2014 (14 stores) and $17.0 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 Company’s consolidated balance
sheets. In addition, the Company occasionally utilizes documentary letters of credit for the purchase of merchandise
in the normal course of business. Issued and outstanding letters of credit totaled $22.1 million at September 27, 2009.