Circuit City 2009 Annual Report Download - page 59

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Table of Contents
Interest and penalties of approximately $0 and $0.1 million related to unrecognized tax benefits were expensed in 2009 and 2008 and are
included in income tax expense. Additionally, included in income tax expense in 2008 is an interest and penalty reserves reversal of
approximately $0.4 million related to a state tax audit that was settled favorably.
10.
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
Leases - The Company is obligated under operating lease agreements for the rental of certain office and warehouse facilities and equipment
which expire at various dates through October 2026. The Company currently leases its headquarters office/warehouse facility in New York
from an entity owned by the Company’s three principal shareholders and senior executive officers. The Company believes that these
payments were no higher than would be paid to an unrelated lessor for comparable space. The Company also acquires certain computer and
communications equipment pursuant to capital lease obligations.
At December 31, 2009, the future minimum annual lease payments for capital leases and related and third-party operating leases were as
follows (in thousands):
Annual rent expense aggregated approximately $27.1 million, $25.0 million and $14.8 million in 2009, 2008 and 2007, respectively.
Included in rent expense was $0.9 million, $0.9 million and $0.6 million in 2009, 2008 and 2007, respectively, to related parties. Rent
expense is net of sublease income of $0.1 million, $0.4 million and $0.9 million for 2009, 2008 and 2007, respectively.
Litigation —
State of Florida, Office of the Attorney General
On September 4, 2009 the Office of the Attorney General, Department of Legal Affairs for the State of Florida filed a lawsuit against
OnRebate.com Inc, TigerDirect Inc. and Systemax Inc. in the Circuit Court of the Eleventh Judicial Court for Miami-Dade County, Florida
alleging deceptive and unfair trade practices under Florida law relating to the offering and processing of customer rebates. The lawsuit
seeks injunctive relief, damages, civil penalties and other equitable relief. The Company denies the allegations in the lawsuit and intends to
vigorously defend the case.
55
Capital
Leases
Operating
Leases
Total
2010
$
1,145
$
24,004
$
25,149
2011
794
24,280
25,074
2012
329
22,793
23,122
2013
155
20,253
20,408
2014
16,367
16,367
2015
-
2019
66,413
66,413
2020
-
2024
11,767
11,767
Thereafter
2,428
2,428
Total minimum lease payments
2,423
188,305
190,728
Less: sublease rental income
354
354
Lease obligation net of subleases
2,423
$
187,951
$
190,374
Less amount representing interest
200
Present value of minimum capital lease payments (including
current portion of $1,029)
$
2,223