Office Depot 2012 Annual Report Download - page 65

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OFFICE DEPOT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Vendor Arrangements: The Company enters into arrangements with substantially all significant vendors that provide for some for
m
of consideration to be received from the vendors. Arrangements vary, but some specify volume rebate thresholds, advertising support
levels, as well as terms for payment and other administrative matters. The volume-based rebates, supported by a vendor agreement,
are estimated throughout the year and reduce the cost of inventory and cost of goods sold during the year. This estimate is regularly
monitored and adjusted for current or anticipated changes in purchase levels and for sales activity. Other promotional consideration
received is event-based or represents general support and is recognized as a reduction of Cost of goods sold and occupancy costs o
r
Inventory, as appropriate based on the type of promotion and the agreement with the vendor. Some arrangements may meet the
specific, incremental, identifiable criteria that allow for direct operating expense offset, but such arrangements are not significant.
New Accounting Standards: Effective for the first quarter of 2013, a new accounting standard will require disclosure of amounts
reclassified out of comprehensive income by component. In addition, companies will be required to present, either on the face o
f
financial statements or in a single note, significant amounts reclassified out of accumulated other comprehensive income and the
income statement line item affected by the reclassification.
Effective for the first quarter of 2014, a new accounting standard will require disclosure of information about the effect or potential
effect of financial instrument netting arrangements on the Company’s financial position. Companies will be required to present both
net (offset amounts) and gross information in the notes to the financial statements for relevant assets and liabilities that are offset.
This standard was further clarified to apply to specified financial instruments subject to master netting agreements.
Including the above, there are no recently issued accounting standards that are expected to have a material effect on the Company’s
financial condition, results of operations or cash flows.
NOTE B – SEVERANCE AND FACILITY CLOSURE COSTS
In recent years, the Company has taken actions to adapt to changing and increasingly competitive conditions in the markets in which
the Company serves. These actions include closing stores and distribution centers, consolidating functional activities, disposing o
f
businesses and assets, and taking actions to improve process efficiencies.
Severance and facility closure accruals associated with exit and restructuring-related activities are as follows:
62
(In millions)
Beginning
Balance
Charges
Incurre
d
Cash
Payments
Non-cash
Settlements
and
Accretion
Currency
and Other
Adjustments
Ending
Balance
201
2
Termination benefits
$12
$26
$ (33) $
—
$1
$6
Lease, contract obli
g
ations and, other costs
95
21
(48) 8
1
77
Total
$107
$47
$ (81)
$8
$2
$83
2011
Termination benefits
$4
$25
$ (17)
$
—
$
—
$12
Lease, contract obli
g
ations and, other costs
113
26
(59) 12
3
95
Total
$117
$51
$ (76)
$12
$3
$ 107