Office Depot 2011 Annual Report Download - page 231

Commitments
The Company leases retail stores and other facilities under operating lease agreements with initial lease terms expiring in
various years through 2040. In addition to minimum rentals, there are certain executory costs such as real estate taxes, insurance
and common area maintenance on most of the Company’s facility leases.
The table below shows future minimum lease payments due under the non-cancelable portions of our leases as of December 31,
2011.
Rent expense was $352,185, $294,838 and $271,162 in 2011, 2010, and 2009, respectively.
Legal Matters
On August 31, 2005, in an effort to expand operations within Mexico, a sublease agreement with respect to a plot of land was
signed between the Company and a third party, under which the Company would sublease the land and build one of its Office
Depot stores. After subsequent analysis, in its own best interest, the Company decided not to proceed with the project and
notified the third party of its intent to early terminate the sublease contract. The third party considered this to be a breach of the
sublease contract, which resulted in the Company filing a lawsuit against the sublessor in July 2006, seeking the early
termination of the contract. The third party filed a counterclaim against the Company seeking mandatory performance by the
Company under the contract.
In October 2008, the Company was ordered under the counterclaim to comply with the terms of the sublease agreement, which
requires the construction of an Office Depot store on the plot of land. The Company filed an appeal in January 2009. On
August 19, 2010 the court rejected the Company’s appeal of January 2009.
The Company is currently seeking an amparo lawsuit (an injunction on constitutional grounds) against the August 19, 2010
ruling. If the verdict of October 2008 were confirmed as definitive, the Company would be required to pay both the rentals due
under the terms of the sublease agreement as well as the construction of an Office Depot store.
As of December 31, 2011, the Company, together with its counsel, estimates that the accrued rentals and the approximate cost of
the construction of the Office Depot store total approximately $17,500. A liability has not been recognized for this amount, as
the Company does not believe that a negative outcome is probable, as there are reasonable legal grounds indicating the
possibility that the October 2008 verdict may be overturned.
As part of its efforts to make Mexican standards converge with international standards, in 2011, the Mexican Board for Research
and Development of Financial Information Standards (“CINIF”) issued the following NIFs, INIFs and improvements to NIFs,
which will become effective as of January 1, 2012:
B-3, Statement of Comprehensive Income
B-4, Statement of Changes in Stockholders’ Equity
C-6, Property, Plant and Equipment
Improvements to Mexican Financial Reporting Standards 2012
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15. Commitments and Contingencies
2012 $324,970
2013
313,093
2014 289,908
2015
282,341
2016 269,559
Thereafter
2,118,879
16. New accounting principles