Staples 2006 Annual Report Download - page 102

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STAPLES, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
B-8
$457.8 million of short-term investments. During fiscal 2006, we also issued letters of credit in the ordinary course of
business to satisfy certain vendor contracts. At February 3, 2007, we had $70.9 million of open letters of credit, which
reduces the available amounts under our revolving credit facility. We finance the majority of our stores and certain
equipment with operating leases.
As of February 3, 2007, the balances available under credit agreements, debt outstanding and principal payments
due on our outstanding debt, operating lease obligations and purchase obligations are presented below (amounts in
thousands):
Payments Due By Period
Contractual Obligations(1)
Available
Credit
Total
Outstanding
Obligations
Less than
1 Year 1 - 3 Years 3 - 5 Years
More than
5 Years
Revolving Credit Facility effective
through October 2011............. $ 679,065 $ — $ — $ — $ — $ —
Senior Notes due August 2007........ — 200,000 200,000 — — —
Notes due October 2012............. — 325,000 — — — 325,000
Lines of credit...................... 131,749 229 229 — — —
Capital leases and other notes payable. — 8,473 1,657 4,284 2,120 412
Total Debt Obligations............ $ 810,814 $ 533,702 $ 201,886 $ 4,284 $ 2,120 $ 325,412
Operating leases.................... $ — $ 6,027,757 $ 676,655 $ 1,295,312 $ 1,131,545 $ 2,924,245
Purchase obligations(2).............. $ — $ 528,709 $ 295,879 $ 115,134 $ 59,298 $ 58,398
Total.............................. $ 810,814 $ 7,090,168 $ 1,174,420 $ 1,414,730 $ 1,192,963 $ 3,308,055
(1) The above table excludes scheduled interest payments on debt obligations since all of the Company’s fixed rate debt
agreements are hedged with derivative instruments that are intended to convert the fixed rate debt agreements into
variable interest rate obligations. Therefore, the amount of future interest payments due on these obligations is not
currently determinable (see Notes D and E to the consolidated financial statements).
(2) Many of our purchase commitments may be canceled by us without advance notice or payment, and we have
excluded such commitments, along with intercompany commitments. Contracts that may be terminated by us
without cause or penalty, but that require advance notice for termination are valued on the basis of an estimate of
what we would owe under the contract upon providing notice of termination.
On October 13, 2006, we entered into an Amended and Restated Revolving Credit Agreement (the “Agreement”)
with Bank of America, N.A and other lending institutions. The Agreement amends and restates the Revolving Credit
Agreement dated as of December 14, 2004, which provided for a maximum borrowing of $750.0 million and was due to
expire in December 2009 (the “Prior Agreement”).
The Agreement provides for a maximum borrowing of $750.0 million which, upon approval of the lenders, we may
increase to $1.0 billion, and expires on October 13, 2011. Borrowings made pursuant to the Agreement may be
syndicated loans, competitive bid loans, or swing line loans, the combined sum of which may not exceed the maximum
borrowing amount. Amounts borrowed under the Agreement may be borrowed, repaid and reborrowed from time to
time until October 13, 2011.
Borrowings made pursuant to the Agreement as syndicated loans will bear interest, payable quarterly or, if earlier,
at the end of any interest period, at either (a) the base rate, described in the Agreement as the higher of the annual rate
of the lead bank’s prime rate or the federal funds rate plus 0.50%, or (b) the Eurocurrency rate (a publicly published
rate) plus a percentage spread based on our credit rating and fixed charge coverage ratio. Borrowings made as
competitive bid loans bear the competitive bid rate as specified in the applicable competitive bid. Swing line loans bear
interest that is the lesser of the base rate or the swing line rate as quoted by the administrative agent under the terms of
the Agreement. Under the Agreement, we agree to pay a facility fee, payable quarterly, at rates that range from 0.060%
to 0.125% depending on our credit rating and fixed charge coverage ratio, and when applicable, a utilization fee. The