CompUSA 2015 Annual Report Download - page 68

Table of Contents
InaccordancewiththeguidanceforaccountingforuncertaintyinincometaxestheCompanyrecognizesthetaxbenefitsfromanuncertaintaxpositiononlyif
itismorelikelythannotthatthetaxpositionwillbesustainedonexaminationbythetaxingauthoritiesbasedonthetechnicalmeritsoftheposition.Thetax
benefitofanuncertaintaxpositionthatmeetsthemore-likely-than-notrecognitionthresholdismeasuredasthelargestamountthatisgreaterthan50%likely
to be realized upon settlement with the tax authority. To theextent we prevail in matters for which accruals have been established or are required to pay
amountsinexcessofaccruals,oureffectivetaxrateinagivenfinancialstatementperiodcouldbeaffected.AsofDecember31,2015theCompanyhadno
uncertain tax positions. Interest and penalties, if any, are recorded in income tax expense. There were no accrued interests or penalty charges related to
unrecognizedtaxbenefitsrecordedinincometaxexpensein2015or2014.
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12. 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 August 2032. 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,communicationsequipment,andmachineryandequipmentpursuantto
capitalleaseobligations.
AtDecember31,2015,thefutureminimumannualleasepaymentsforcapitalleasesandrelatedandthird-partyoperatingleaseswereasfollows(inmillions):
 
Capital
Leases  
Operating
Leases   Total 
         
2016   0.6  $ 24.8  $ 25.4
2017   0.3   25.0   25.3
2018   0.1   22.1   22.2
2019   -   20.2   20.2
2020   -   16.3   16.3
2021-2025   -   44.2   44.2
2026-2030   -   22.5   22.5
Thereafter   -   4.4   4.4
Totalminimumleasepayments   1.0   179.5   180.5
Less:subleaserentalincome   -   9.2   9.2
Leaseobligationnetofsubleases   1.0  $ 170.3   171.3
Less:amountrepresentinginterest   0.0      
Presentvalueofminimumcapitalleasepayments(includingcurrent
portionof$0.6)  $ 1.0      
Annualrentexpenseaggregatedapproximately$26.4million,$31.5millionand$34.6millionin2015,2014and2013,respectively.Includedinrentexpense
was$1.0millionin2015,$0.9millionin2014and2013,torelatedparties.Rentexpenseisnetofsubleaseincomeof$0.1millionfor2015,$0.0millionfor
2014,and$0.1millionfor2013,respectively.NATGoperationsannualrentexpensetotaledapproximately$10.7million,$18.3millionand$20.6millionfor
2015,2014and2013,respectively.
Theoperatingleaseagreementsgenerallyprovideforrentalpaymentsonagraduatedbasisandforoptionstorenew,whichcouldincreasefutureminimum
leasepaymentsifexercised.TheCompanyrecognizesrentexpenseonastraight‑linebasisovertheleaseperiodandhasaccruedforrentexpenseincurredbut
not paid. Deferred rent represents the difference between actual operating lease payments due and straight‑line rent expense. The excess is recorded as a
deferredrentliabilityintheearlyperiodsofthelease,whencashpaymentsaregenerallylowerthanstraight‑linerentexpense,andarereducedinthelater
periodsoftheleasewhenpaymentsbegintoexceedthestraight‑lineexpense.TheCompanyalsoaccountsforleaseholdimprovementincentiveswithinits
deferredrentliability.
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