OfficeMax 2006 Annual Report Download - page 70

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66
maintenance and insurance. Rental payments include minimum rentals plus, insome cases,
contingent rentals based ona percentageofsales above specified minimums.Rental expense for
operating leases included the following components:
2006 20052004
(thousands)
Minimumrentals ......................................... $343,203 $365,880 $371,959
Contingent rentals....................................... 763 752 1,036
Sublease rentals ......................................... (1,660)(2,021) (3,007)
$342,306 $ 364,611 $369,988
For operating leases with remaining terms of more than one year, the minimum lease payment
requirements are: $341.7 millionfor 2007, $310.8 million for 2008, $279.1 millionfor 2009,
$245.9 million for 2010, $215.7 million for 2011and $636.3 millionthereafter. These minimum lease
payments do not include contingent rentalpayments that may be due based on a percentage of sales
in excess of stipulatedamounts. These futureminimum lease payment requirements have not been
reduced by $63.8 million of minimum sublease rentals due in the future under noncancelable
subleases. These sublease rentals include amounts related to closed storesand other facilities that
are accounted for in the integration activities and facility closures reserve.See Note 4, Integration
Activities and Facility Closures.
The Company capitalizeslease obligations for which it assumes substantially all property rights
and risks of ownership. The Company did nothave any material capital leases during any of t he
periods presented.
9. Sales ofAccounts Receivable
On June 19, 2006,the Company entered into aFourthAmended and Restated Receivables Sale
Agreement with agroup oflenders,which replacedthe Third Amended and Restated Receivables
Sale Agreement that expiredonthatday. The agreement allows the Company to sell, on a revolving
basis, an undivided interest in a defined pool of receivables while retaining a subordinated interest in a
portion of thereceivables. The receivablesare sold without legal recourse to third party conduits
through awholly owned bankruptcy-remote special purpose entity that is consolidated for financial
reporting purposes. The Company continues servicing the soldreceivables and charges the third
party conduits a monthly servicing fee atmarket rates. The program qualifies for sale treatment under
SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities.”The amount of available proceeds under the program is limited to $200 million, and is
subject to change based on the level ofeligible receivables, restrictions on concentrations of receivables
and the historical performance of the transferred receivables. AtDecember30, 2006 and December 31,
2005,$180.0millionand $163.0 million, respectively, of sold accounts receivable were excluded from
receivables in the accompanying Consolidated Balance Sheets. The Company’s subordinated
retained interest inthe transferred receivables was $111.2 millionand $73.3million at December 30,
2006 and December 31, 2005, respectively, and is included in receivables, net in the Consolidated
Balance Sheets. Expenses associated with the securitization program totaled $10.6 million, $5.5 million
and $4.2 million in 2006, 2005 and 2004, respectively. These expenses relate primarily to the loss on
sale of receivables and discount on retained interests, facility fees and professional fees associated with
the program, and are included in the Consolidated Statements of Income (Loss). Thereceivables sale
agreement will expire on June 18, 2007.