Office Depot 2012 Annual Report Download - page 89

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OFFICE DEPOT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The existing designated hedge contracts are highly effective and the ineffective portion is considered immaterial. As of December 29,
2012, the foreign exchange contracts extend through December 2013. Losses currently deferred in OCI are expected to be recognized
in earnings within the next twelve months. There were no hedging arrangements requiring collateral. However, the Company may be
required to provide collateral on certain arrangements in the future. The fair values of the Company’s foreign currency contracts and
fuel contracts are the amounts receivable or payable to terminate the agreements at the reporting date, taking into account current
exchange rates. The values are based on market-based inputs or unobservable inputs that are corroborated by market data.
NOTE K — REDEEMABLE PREFERRED STOCK
On June 23, 2009, Office Depot, Inc. issued 274,596 shares of 10.00% Series A Redeemable Convertible Participating Perpetual
Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”), and 75,404 shares of 10.00% Series B Redeemable
Conditional Convertible Participating Perpetual Preferred Stock, par value $0.01 per share (“Series B Preferred Stock”), to funds
advised by BC Partners, Inc. (the “Investors”), for $350 million (collectively, the “Redeemable Preferred Stock”). The issued shares
are out of 280,000 authorized shares of Series A Preferred Stock and 80,000 authorized shares of Series B Preferred Stock. Approval
of conversion and voting rights for these shares was received at a special shareholders’ meeting on October 14, 2009.
The initial liquidation value of $1,000 per preferred share and the conversion rate of $5.00 per common share allow the two series o
f
preferred stock to be initially convertible into 70 million shares of common stock. The conversion rate is subject to anti-dilution
adjustments. Until converted or otherwise redeemed, the Redeemable Preferred Stock is recorded outside of permanent equity on the
Consolidated Balance Sheets because certain redemption conditions are not solely within the control of Office Depot. The balance is
presented inclusive of accrued dividends measured at fair value and net of approximately $25 million of fees.
86
Non-Designated Hedging
Instruments Designated Cash Flow Hedges
Amounts of Gain/(Loss)
Recognized in Statement of
Operations (a)(b)
(Gain)/Loss Recognized
in OCI
(Gains)/Loss Reclassified
from OCI to Statement of
Operations (c)
(In thousands)
2012
2011
2010
2012
2011
2010
2012
2011
2010
Forei
g
n exchan
g
e contracts
$(3,066)
$(6,452)
$(117)
$(515)
$1,646
$(1,982)
$(165)
$1,123
$(2,229)
Commodity
contracts-fuel
452
3,601
253
—
—
—
—
—
—
Total
$(2,614)
$(2,851) $ 136 $(515) $1,646
$(1,982)
$(165)
$1,123
$(2,229)
(a) Forei
g
n exchan
g
e contracts amounts are included in Miscellaneous income, net
(b) Approximately 60% of the fuel commodity contracts amounts are reflected in Cost of goods sold and occupancy costs. The
remainin
g
40% of the amounts are reflected in Store and warehouse o
p
eratin
g
and sellin
g
ex
p
enses.
(c) Included in Cost of
g
oods sold and occu
p
anc
y
costs.