Commitments and Contingencies

9 Months Ended

Oct. 29, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

8.           Commitments and Contingencies

Lease Commitments.

We have entered into capital leases for certain property and technology hardware.  At October 29, 2011, the total capital lease obligation was $2.3 million, of which $0.2 million was classified as a short-term liability and included in short-term capital lease obligations and $2.1 million was classified as a long-term liability and included in other liabilities, net, on our unaudited condensed consolidated balance sheets.  At January 29, 2011, the total capital lease obligation was $2.6 million, of which $0.3 million was classified as short-term and included in short-term capital lease obligations and $2.3 million was classified as long-term and included in other liabilities, net, on our unaudited condensed consolidated balance sheets.

During the thirteen weeks ended October 29, 2011, we opened 16 stores and closed 3 stores increasing our lease commitments by a net of 13 retail stores.  The 16 stores we opened have initial lease termination dates between August 2016 and December 2021.  At October 29, 2011, the future minimum lease payments, excluding maintenance, insurance and real estate taxes, for our current capital and operating leases, were as follows (in thousands):

	Capital		Operating		Total
Remaining Fiscal 2012	$	135	$	11,678	$	11,813
Fiscal 2013		366		41,686		42,052
Fiscal 2014		366		34,508		34,874
Fiscal 2015		366		25,417		25,783
Fiscal 2016		369		17,065		17,434
Fiscal 2017		379		10,909		11,288
Thereafter		1,444		15,008		16,452
Total minimum lease payments		3,425		156,271		159,696
Less amount representing interest		1,097		-		1,097
Present value of total minimum lease payments	$	2,328	$	156,271	$	158,599

Included in the above table are future minimum lease payments on our distribution center which aggregate approximately $2.8 million.  The related operating lease expires in December 2014.

Annual Bonuses and Equity Incentive Awards.

Specified officers and corporate employees of our Company are eligible to receive annual bonuses, based on measures of Company operating performance.  At October 29, 2011 and January 29, 2011, there was $3.5 million and $4.1 million, respectively, of annual bonus related expenses included in accrued payroll expenses.

In addition, the Compensation Committee of the Board has placed performance criteria on awards of restricted stock units (PSUs) to our Named Executive Officers.  The performance criteria are tied to performance targets with respect to future return on invested capital and earnings before interest and taxes over a specified period of time.  These PSUs are expensed under the provisions of ASC Topic 718, Compensation - Stock Compensation, and are evaluated each quarter to determine the probability that the performance conditions set within will be met.

Legal Proceedings and Other Contingencies.

We are a party to various legal proceedings incidental to our business.  We do not believe that any of these matters will, individually or in the aggregate, have a material adverse effect on our business or financial condition.  We cannot give assurance, however, that one or more of these legal proceedings will not have a material adverse effect on our results of operations for the period in which they are resolved.  At October 29, 2011 and January 29, 2011, we estimated that the liabilities related to these matters were approximately $0.2 million and $0.4 million, respectively, and accordingly, accrued $0.2 million and $0.4 million, respectively, as current liabilities on our unaudited condensed consolidated balance sheets.

The estimates of our liability for pending and unasserted potential claims do not include litigation costs.  It is our policy to accrue legal fees as incurred.

From time to time, we enter into certain types of agreements that require us to indemnify parties against third party claims under certain circumstances.  Generally, these agreements relate to: (a) agreements with vendors and suppliers under which we may provide customary indemnification to our vendors and suppliers in respect to actions they take at our request or otherwise on our behalf; (b) agreements to indemnify vendors against trademark and copyright infringement claims concerning merchandise manufactured specifically for or on behalf of the Company; (c) real estate leases, under which we may agree to indemnify the lessors from claims arising from our use of the property; and (d) agreements with our directors, officers and employees, under which we may agree to indemnify such persons for liabilities arising out of their relationship with us.  We have director and officer liability insurance, which, subject to the policy's conditions, provides coverage for indemnification amounts payable by us with respect to our directors and officers up to specified limits and subject to certain deductibles.

If we believe that a loss is both probable and estimable for a particular matter, the loss is accrued in accordance with the requirements of ASC Topic 450, Contingencies.  With respect to any matter, we could change our belief as to whether a loss is probable or estimable, or our estimate of loss, at any time.  Even though we may not believe a loss is probable or estimable, it is reasonably possible that we could suffer a loss with respect to that matter in the future.