OfficeMax 2012 Annual Report Download - page 103

The Company recognizes accrued interest and penalties associated with uncertain tax positions as part of
income tax expense. As of December 29, 2012, the Company had approximately $0.6 million of accrued interest
and penalties associated with uncertain tax positions.
Deferred taxes are not recognized for temporary differences related to investments in certain foreign
subsidiaries because such earnings are considered to be indefinitely reinvested in the business. The determination
of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable
because of the complexities associated with its hypothetical calculation.
8. Leases
The Company leases its retail stores as well as certain other property and equipment under operating leases.
These leases are noncancelable and generally contain multiple renewal options for periods ranging from three to
five years, and require the Company to pay all executory costs such as maintenance and insurance. Rental
payments include minimum rentals plus, in some cases, contingent rentals based on a percentage of sales above
specified minimums. Rental expense for operating leases included the following components:
2012 2011 2010
(thousands)
Minimum rentals ................................................ $324,952 $336,924 $338,924
Contingent rentals ............................................... 1,096 1,060 1,187
Sublease rentals ................................................. (233) (504) (422)
Total .......................................................... $325,815 $337,480 $339,689
For operating leases with remaining terms of more than one year, the minimum lease payment requirements
are:
Total
(thousands)
2013 ............................................................................ $ 351,376
2014 ............................................................................ 300,599
2015 ............................................................................ 241,670
2016 ............................................................................ 182,050
2017 ............................................................................ 127,165
Thereafter ....................................................................... 198,601
Total ........................................................................... $1,401,461
These minimum lease payments do not include contingent rental payments that may be due based on a
percentage of sales in excess of stipulated amounts. These future minimum lease payment requirements have not
been reduced by $22.6 million of minimum sublease rentals due in the future under noncancelable subleases.
These sublease rentals include amounts related to closed stores and other facilities that are accounted for in the
facility closures reserve.
As a result of purchase accounting from the 2003 acquisition of the U.S. retail business, we recorded an
asset relating to store leases with terms below market value and a liability for store leases with terms above
market value. The asset will be amortized through 2027 ($4 million per year), while the liability was amortized
through 2012 ($11 million per year). From the acquisition date through 2012, the net amortization of these items
reduced rent expense by approximately $7 million per year. Beginning in 2013, the completed amortization of
the liability will result in no further reduction of rent expense and the amortization of the asset will continue to
result in additional rent expense of approximately $4 million per year.
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