Note 8 – Debt

The Company has a $472.8 multicurrency credit agreement (the Credit Facility) which expires in October 2002. Borrowings under the Credit Facility bear interest at a base rate or an increment over LIBOR at the Company’s option. The Credit Facility contains covenants which limit, among other things, the Company’s ability to incur indebtedness, grant liens, make acquisitions, merge, declare dividends, dispose of assets, issue or repurchase its common stock in excess of $100.0 (plus any proceeds and tax benefits resulting from stock option exercises and tax benefits resulting from restricted shares purchased by employees from the Company), and require the Company to meet certain financial measures regarding fixed charge coverage, leverage and tangible net worth. The Company is prohibited under the Credit Facility from paying cash dividends on common shares. The Company had borrowings outstanding under the Credit Facility of $143.5 at January 28, 2001, and $133.4 at January 23, 2000. The weighted average interest rate in 2000 and 1999 was approximately 6.8% and 5.7%, respectively.

The Company’s long-term debt obligations consist of capital lease liabilities at January 28, 2001. Scheduled principal payments and capitalized lease obligations as of January 28, 2001 are as follows: 2001 — $0.9; 2002 — $0.8; 2003 — $0.8; 2004 — $0.8; 2005 — $0.8; 2006 and, thereafter, — $11.7.

Note 9 – Leases

Operating Leases: The Company conducts operations primarily in leased facilities. Store leases are generally for terms of 5 to 20 years. Borders’ leases generally contain multiple three to five-year renewal options which allow Borders the option to extend the life of the leases up to 25 years beyond the initial noncancellable term. Walden’s leases generally do not contain renewal options. Certain leases provide for additional rental payments based on a percentage of sales in excess of a specified base. Also, certain leases provide for the payment by the Company of executory costs (taxes, maintenance and insurance).

Lease Commitments: Future minimum lease payments under operating leases at January 28, 2001, total $260.4 in 2001, $247.9 in 2002, $228.4 in 2003, $208.1 in 2004, $193.1 in 2005, $1,793.0 in all later years and, in the aggregate, total $2,930.9.

Rental Expenses: A summary of operating lease rental expense and short-term rentals follows:

Capitalized Leases: The Company accounts for three stores and certain computer equipment under capital leases. At January 28, 2001, the Company’s commitments under leases accounted for as capital leases aggregated $15.8.

Lease Financing Facility: The Company has a $175.0 lease financing facility (the Lease Facility) to finance new stores and other property through operating leases, which expires in October 2002. The Lease Facility provides financing to lessors through loans from a third party lender for up to 95% of a project cost. It is expected that lessors will make equity contributions approximating 5% of each project. Independent of its obligations as lessee, the Company guarantees payment when due of all amounts required to be paid to the third party lender. The principal amount guaranteed is limited to approximately 89% of the original cost of a project so long as the Company is not in default under the lease relating to such project. The Lease Facility contains covenants and events of default that are similar to those contained in the Credit Facility described above. There was $163.1 and $162.9 outstanding under the Lease Facility at January 28, 2001, and January 23, 2000, respectively. In October 2000, the Company transferred four properties previously financed under the Lease Facility with a total financed value of $13.8 to a new temporary facility with terms similar to those of the Lease Facility. In February 2001, two of these properties were transferred back to the Lease Facility, and two were permanently financed through operating leases. Also in February 2001, ten additional properties previously financed through the Lease Facility with a total financed value of $44.6 were permanently financed through operating leases.