Commitments and Contingencies

12 Months Ended

Feb. 02, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

NOTE 7: COMMITMENTS AND CONTINGENCIES

Operating Leases and Other Purchase Commitments

We lease certain property and equipment under various non-cancelable capital and operating leases. The leases provide for monthly fixed-amount rentals or contingent rentals based upon sales in excess of stated amounts and normally require us to pay real estate taxes, insurance, common area maintenance costs and other occupancy costs. Generally, the leases have primary terms ranging from 20 to 30 years and include renewal options ranging from 5 to 20 years.

At February 2, 2013, future minimum rental commitments under capital leases and non-cancelable operating leases consisted of the following:

		Capital		Operating
		Leases		Leases
2013		$	14,754	$	81,379
2014			13,874		68,843
2015			11,694		61,528
2016			9,928		52,527
2017			6,103		42,076
Thereafter			18,521		136,333
	Total minimum lease payments	$	74,874	$	442,686
Less: portion representing interest			(24,332)
	Total capital lease obligations	$	50,542

Total rental expense for operating leases was $105,064, $99,184,and $98,501,during 2012, 2011, and 2010, respectively, including contingent rent of $17,271, $16,054, and $14,284, respectively, and common area maintenance costs of $12,290, $11,919, and $11,611, respectively.

In the normal course of business, we purchase merchandise under purchase commitments; enter into contractual commitments with real estate developers and construction companies for new store construction and store remodeling; and maintain contracts for various information technology, telecommunications, maintenance and other services. Commitments for purchasing merchandise generally do not extend beyond six months and may be cancelable several weeks prior to the vendor shipping the merchandise. Contractual commitments for the construction and remodeling of stores are typically lump sum or cost plus construction contracts. Contracts to purchase various services are generally less than two year commitments and are cancelable within several weeks notice.

From time to time we have issued guarantees to landlords under leases of stores operated by our subsidiaries. Certain of these stores were sold in connection with the Saks Department Store Group and the Northern Department Store Group transactions which occurred in July 2005 and March 2006, respectively. If the purchasers fail to perform certain obligations under the leases guaranteed, we could have obligations to landlords under such guarantees. Based on the information currently available, we do not believe that the potential obligations under these lease guarantees would be material.

As of February 2, 2013,we may be required to deliver shares and/or cash to holders of the convertible notes described in Note 6 prior to the stated maturity date of said notes based on the value of our common stock.

Legal

On February 2, 2011, the plaintiffs in Dawn Till and Mary Josephs v. Saks Incorporated et al, filed a complaint, with which we were served on March 10, 2011, in a purported class and collective action in the U.S. District Court for the Northern District of California. The complaint alleges that the plaintiffs were improperly classified as exempt from the overtime pay requirements of the Fair Labor Standards Act (“FLSA”) and the California Labor Code and that we failed to pay overtime, provide itemized wage statements and provide meal and rest periods. On March 8, 2011, the plaintiffs filed an amended complaint adding a claim for penalties under the California Private Attorneys General Act of 2004. The plaintiffs seek to proceed collectively under the FLSA and as a class under the California statutes on behalf of individuals who have been employed by OFF 5TH as Selling and Service Managers, Merchandise Team Managers, or Department Managers and similar titles. On February 8, 2012, the same plaintiffs' counsel from the Tillcase filed a complaint, with which we were served on March 2, 2012, in the U.S. District Court for the Southern District of New York, alleging essentially the same FLSA claim and related claims under New York state law (Tate – Small et al v. Saks Incorporated et al). This case was subsequently transferred to the U.S. District Court for the Northern District of California.We believe that our managers at OFF 5TH have been properly classified as exempt under both federal and state law and we intend to defend these lawsuits vigorously. It is not possible to predict whether the courts will permit these actions to proceed collectively or as a class.We cannot reasonably estimate the possible loss or range of loss, if any, that may arise from these matters.

In addition to the litigation described in the preceding paragraph, we are involved in legal proceedings arising from our normal business activities and have accruals for losses where appropriate. Management believes that none of these legal proceedings will have a material adverse effect on our consolidated financial position, results of operations, or liquidity.

Taxes

We are routinely under examination by federal, state or local taxing authorities in the areas of income taxes and the remittance of sales and use taxes. These examinations include questioning the timing and amount of deductions, the allocation of income among various tax jurisdictions and compliance with federal, state and local tax laws. Based on annual evaluations of tax filing positions, we believewe have adequately accrued for our tax exposures. To the extent weare to prevail in matters for which accruals have been established or are required to pay amounts in excess of income tax reserves, our effective tax rate in a given financial statement period may be materially impacted. As of February 2, 2013, certain state income and sales and use tax examinations were ongoing. On February 27, 2013, we received a proposed assessment of $20,493 for sales and use tax from the New York State Department of Taxation and Finance (“Department”) for the audit period September 1, 2003 through August 31, 2009. The assessment relates to the issue of affiliated nexus and the Department contends that all ofour legal entities which ship items into New York should have collected tax on such shipments. We disagree with the Department's position on this issue and will vigorously defend the assessment based upon the technical merits of the nexus law. We have not established any accruals for this matter for the time period covered by the audit.We cannot reasonably estimate the possible loss or range of loss, if any, that may arise from this matter.