Staples 2007 Annual Report Download - page 122

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STAPLES, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)
NOTE E Derivative Instruments and Hedging Activities (Continued)
obligated to pay 298 million in Canadian dollars. On November 16, 2006, Staples entered into a currency swap, for an
aggregate notional amount of $7.5 million. Staples, upon maturity of the agreement, was entitled to receive $7.5 million
and was obligated to pay 8.6 million in Canadian dollars. Staples was also entitled to receive quarterly interest payments
on $7.5 million at a fixed rate of 5.3725% and was obligated to make quarterly interest payments on 8.6 million Canadian
dollars at a fixed rate of 4.315%. During 2007, Staples entered into currency swaps, for an aggregate notional amount of
$17.5 million. Staples, upon maturity of the agreements, was entitled to receive $17.5 million and was obligated to pay
20.1 million in Canadian dollars. Staples was also entitled to receive quarterly interest payments on $17.5 million and was
obligated to make quarterly interest payments on 20.1 million Canadian dollars. On August 15, 2007, the Company paid
$83.3 million to settle all of these foreign currency swaps. These swaps were designated as a foreign currency hedge on
Staples’ net investment in Canadian dollar denominated subsidiaries and the loss was recorded as a cumulative
translation adjustment in stockholders’ equity.
On August 15, 2007, the Company entered into a $300.0 million foreign currency swap that has been designated as a
foreign currency hedge on Staples’ net investment in Canadian dollar denominated subsidiaries. Staples, upon maturity
of the agreement, will be entitled to receive $300.0 million and will be obligated to pay 318.6 million in Canadian dollars.
Staples will also be entitled to receive quarterly interest payments on $300.0 million at a fixed rate of 5.28% and will be
obligated to make quarterly interest payments on 318.6 million Canadian dollars at a fixed rate of 5.079%. At February 2,
2008, the currency swap had an aggregate fair value loss of $10.1 million, which was included in other long-term
obligations.
During fiscal years 2007, 2006 and 2005, foreign currency gains (losses), net of taxes of $24.6 million, $5.6 million
and $(11.5) million, respectively, were recorded in the cumulative translation adjustment line.
NOTE F Commitments and Contingencies
Staples leases certain retail and support facilities under long-term non-cancelable lease agreements. Most lease
agreements contain renewal options and rent escalation clauses and, in some cases, allow termination within a certain
number of years with notice and a fixed payment. Certain agreements provide for contingent rental payments based on
sales.
Other long-term obligations at February 2, 2008 include $127.0 million relating to future rent escalation clauses and
lease incentives under certain existing store operating lease arrangements. These rent expenses are recognized on a
straight-line basis over the respective terms of the leases. Future minimum lease commitments due for retail and support
facilities (including lease commitments for 127 retail stores not yet opened at February 2, 2008) and equipment leases
under non-cancelable operating leases are as follows (in thousands):
Fiscal Year: Total
2008 ............................................................ $ 756,963
2009 ............................................................ 746,244
2010 ............................................................ 700,751
2011 ............................................................ 647,771
2012 ............................................................ 586,167
Thereafter ....................................................... 2,787,403
$6,225,299
Future minimum lease commitments do not include $81.6 million of minimum rentals due under non-cancelable
subleases.
Rent expense was approximately $646.2 million, $612.8 million and $566.1 million for fiscal years 2007, 2006 and
2005, respectively.
As of February 2, 2008, Staples had purchase obligations of $702.4 million. Many of the Company’s purchase
commitments may be canceled by the Company without advance notice or payment, and the Company has excluded such
commitments, along with intercompany commitments from the following schedule. Contracts that may be terminated by
the Company without cause or penalty, but that require advance notice for termination are valued on the basis of an
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