Office Depot 2011 Annual Report Download - page 136

liabilities, respectively, on the Consolidated Balance Sheets. For scheduled rent escalation clauses during the
lease terms or for rental payments commencing at a date other than the date of initial occupancy, we record
minimum rental expenses on a straight-line basis over the terms of the leases.
Certain leases contain provisions for additional rent to be paid if sales exceed a specified amount, though such
payments have been immaterial during the years presented.
The table below shows future minimum lease payments due under the non-cancelable portions of our leases as of
December 31, 2011. These minimum lease payments include facility leases that were accrued as store closure
costs. Additional information including optional lease renewals follows this table.
(Dollars in thousands)
2012 ....................................................... $ 488,057
2013 ....................................................... 426,975
2014 ....................................................... 355,366
2015 ....................................................... 282,308
2016 ....................................................... 208,535
Thereafter .................................................. 565,820
2,327,061
Less sublease income ......................................... 54,270
Total ...................................................... $2,272,791
We determine the lease term at inception to be the non-cancelable rental period plus any renewal options that are
considered reasonably assured. Leasehold improvements are depreciated over the shorter of their estimated
useable lives or the identified lease term. Lease payments for the next five years and thereafter that include both
the non-cancelable amounts from above, plus the renewal options included in our projected lease term are, $490
million for 2012; $443 million for 2013; $401 million for 2014; $360 million for 2015; $314 million for 2016
and $1,407 million thereafter, for a total of $3,415 million, $3,361 million net of sublease income.
Rent expense, including equipment rental, was $447.1 million, $469.4 million and $498.6 million in 2011, 2010,
and 2009, respectively. Rent expense was reduced by sublease income of $3.0 million in 2011, $2.8 million in
2010 and $2.9 million in 2009.
Legal Matters: We are involved in litigation arising in the normal course of our business. While, from time to
time, claims are asserted that make demands for a large sum of money (including, from time to time, actions
which are asserted to be maintainable as class action suits), we do not believe that contingent liabilities related to
these matters (including the matters discussed below), either individually or in the aggregate, will materially
affect our financial position, results of our operations or cash flows.
On April 6, 2011, a putative class action lawsuit was filed against the company and certain current and former
executive officers alleging violations of the Securities Exchange Act of 1934 and seeking damages, fees, costs
and equitable relief. The allegations made in this lawsuit primarily relate to the company’s previous financial
disclosures and reports regarding the certain tax losses described below. The lawsuit was filed in the United
States District Court for the Southern District of Florida captioned as Climo v. Office Depot, Inc, Steve Odland,
Michael D. Newman and Neil R. Austrian. The Court granted a request by the Central Laborers’ Pension Fund
(“CLPF”) to appoint it as lead plaintiff in the case and the CLPF filed its amended complaint on September 6,
2011. The company filed a motion to dismiss the Complaint November 7, 2011, plaintiff’s opposition to the
motion to dismiss was filed on January 7, 2012, and the company’s reply was filed on February 7, 2012. Pursuant
to Court Order, all discovery is stayed pending a decision on the motion to dismiss.
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