OfficeMax 2011 Annual Report Download - page 85

Recently Issued or Newly Adopted Accounting Standards
In June 2011, the FASB issued guidance which establishes disclosure requirements for other comprehensive
income. The guidance requires the reporting of components of other comprehensive income and components of
net income together as components of total comprehensive income, and is effective for periods beginning on or
after December 15, 2011. The guidance requires retrospective application and earlier application is permitted.
The adoption of this guidance affects the presentation of certain elements of the Company’s financial statements,
but these changes in presentation will not have a material impact on our financial statements.
2. Facility Closure Reserves
We conduct regular reviews of our real estate portfolio to identify underperforming facilities, and close
those facilities that are no longer strategically or economically beneficial. We record a liability for the cost
associated with a facility closure at its fair value in the period in which the liability is incurred, primarily the
location’s cease-use date. Upon closure, unrecoverable costs are included in facility closure reserves and include
the present value of future lease obligations, less contractual or estimated sublease income. Accretion expense is
recognized over the life of the required payments.
During 2011, we recorded facility closure charges of $5.6 million in our Retail segment related to closing
six underperforming domestic stores prior to the end of their lease terms, of which $5.4 million was related to the
lease liability and $0.2 million was related to asset impairments.
During 2010, we recorded facility closure charges of $13.1 million in our Retail segment, of which $11.7
million was related to the lease liability and other costs associated with closing eight domestic stores prior to the
end of their lease terms, and $1.4 million was related to other items. In 2009, we recorded charges of
$31.2 million related to the closing of 21 underperforming stores prior to the end of their lease terms, of which 16
were in the U.S. and five were in Mexico.
These charges were included in other operating expenses, net in the Consolidated Statements of Operations.
Facility closure reserve account activity during 2011, 2010 and 2009 was as follows:
Total
(thousands)
Balance at December 27, 2008 ......................................................... $48,933
Charges related to stores closed in 2009 ............................................. 31,208
Transfer of deferred rent balance ................................................... 3,214
Changes to estimated costs included in income ........................................ 9
Cash payments ................................................................. (24,594)
Accretion ..................................................................... 2,802
Balance at December 26, 2009 ......................................................... $61,572
Charges related to stores closed in 2010 ............................................. 13,069
Transfer of deferred rent and other balances .......................................... 5,985
Changes to estimated costs included in income ........................................ (1,358)
Cash payments ................................................................. (22,260)
Accretion ..................................................................... 4,665
Balance at December 25, 2010 ......................................................... $61,673
Charges related to stores closed in 2011 ............................................. 5,406
Transfer of deferred rent and other balances .......................................... 928
Changes to estimated costs included in income ........................................ 262
Cash payments ................................................................. (22,311)
Accretion ..................................................................... 3,117
Balance at December 31, 2011 ......................................................... $49,075
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