KR » Topics » Related Items: Lease Liabilities - Coordinated Store Closing Plans

This excerpt taken from the KR 10-K filed Mar 6, 2006.

Related Items: Lease Liabilities – Coordinated Store Closing Plans

In 2000 and 2001, the Company recorded expense related to the present value of lease liabilities for stores identified for closure. Due to operational changes, performance improved at five stores subsequent to the recording of the future lease liabilities. As a result of this improved performance, in the first quarter of 2003 the Company modified its original plans and determined that these five locations will remain open. Additionally, closing and exit costs at other locations previously recorded were less costly than anticipated. In total, in the first quarter of 2003, the Company recorded pre-tax income of $10 to adjust these liabilities to reflect the outstanding lease commitments through 2020 at the locations remaining under the plans. The following table summarizes the changes in the balances of the liabilities:

 

Balances at February 2, 2002(1)

   $ 64  

Payments

     (4 )

Balances at February 1, 2003

     60  

Lease liabilities reversed

     (10 )

Payments, including $12 related to the synthetic lease buyout

     (18 )

Balances at January 31, 2004

     32  

Payments

     19  

Balances at January 29, 2005

   $ 13  

(1) The beginning balance represents the balance of impairment charges recorded in prior years.


The $13 liability for store closing liabilities relates to the present value of lease obligations remaining through 2020. Sales at store remaining under the plan totaled $18, $17 and $17 in 2004, 2003 and 2002, respectively.

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