Kohl's 2008 Annual Report Download - page 55

KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
3. Debt (continued)
We have various facilities upon which we may draw funds. As of year-end 2008, these facilities included a
$900 million senior unsecured revolving facility and two demand notes with availability of $50 million.
Depending on the type of advance under these facilities, amounts borrowed bear interest at competitive bid rates;
LIBOR plus a margin, depending on our long-term unsecured debt ratings; or the agent bank’s base rate. The
$900 million senior unsecured revolving credit facility agreement matures on October 12, 2011. The co-leads of
this facility, The Bank of New York Mellon and Bank of America, have each committed $100 million. The
remaining 12 lenders have each committed between $30 and $130 million.
Information related to our revolving facilities is as follows:
2008 2007
($ in Millions)
Maximum outstanding during year ................................. $383 $392
Average outstanding during year .................................. 40 63
Outstanding at year end .......................................... ——
Weighted average interest rate .................................... 2.4% 6.0%
We reached our highest short-term borrowing level for 2008 on November 6, 2008 and for 2007 on
September 27, 2007.
Our debt agreements contain various covenants including limitations on additional indebtedness and certain
financial tests. As of January 31, 2009, we were in compliance with all covenants of the debt agreements.
We also have outstanding letters of credit and stand-by letters of credit totaling approximately $38 million at
January 31, 2009.
Interest payments, net of amounts capitalized, were $145 million for 2008, $59 million for 2007 and $68
million for 2006.
4. Commitments
We lease certain property and equipment. Rent expense is recognized on a straight-line basis over the
expected lease term. The lease term begins on the date we become legally obligated for the rent payments or we
take possession of the building or land for initial setup of fixtures and merchandise or land improvements,
whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options
would result in an economic penalty. Failure to exercise such options would result in the recognition of
accelerated depreciation expense of the related assets.
Rent expense charged to operations was $448 million for 2008, $417 million for 2007 and $389 million for
2006. Rent expense includes contingent rents, which are based on sales, of $3 million for 2008 and $4 million for
both 2007 and 2006. In addition, we are often required to pay real estate taxes, insurance and maintenance costs.
These items are not included in the rent expenses listed above. Many store leases include multiple renewal
options which are exercisable at our option. The renewal options generally include four additional five-year
options, but some range from two additional five-year periods to eight ten-year periods.
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