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COMMITMENTS, CONTINGENCIES AND OTHER MATTERS | 12 Months Ended
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Dec. 31, 2014
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS [Abstract] |
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS | 11. 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, 2014, 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 |
2015 |  |  |  | 2.8 |  |  | $ | 28.3 |  |  | $ | 31.1 |
2016 |  |  |  | 0.6 |  |  |  | 26.4 |  |  |  | 27.0 |
2017 |  |  |  | 0.3 |  |  |  | 26.0 |  |  |  | 26.3 |
2018 |  |  |  | - |  |  |  | 21.4 |  |  |  | 21.4 |
2019 |  |  |  | - |  |  |  | 19.1 |  |  |  | 19.1 |
2020-2024 |  |  |  | - |  |  |  | 51.7 |  |  |  | 51.7 |
2025-2029 |  |  |  | - |  |  |  | 25.6 |  |  |  | 25.6 |
Thereafter |  |  |  | - |  |  |  | 8.0 |  |  |  | 8.0 |
Total minimum lease payments |  |  |  | 3.7 |  |  |  | 206.5 |  |  |  | 210.2 |
Less: sublease rental income |  |  |  | - |  |  |  | 2.5 |  |  |  | 2.5 |
Lease obligation net of subleases |  |  |  | 3.7 |  |  | $ | 204.0 |  |  |  | 207.7 |
Less: amount representing interest |  |  |  | 0.1 |  |  |  |  |  |  |  |  |
Present value of minimum capital lease payments (including current portion of $2.7) |  |  | $ | 3.6 |  |  |  |  |  |  |  |  |
Annual rent expense aggregated approximately $31.5 million, $34.6 million and $33.4 million in 2014, 2013 and 2012, respectively. Included in rent expense was $0.9 million in 2014, 2013 and 2012, to related parties. Rent expense is net of sublease income of $0.0 million for 2014, $0.1 million for 2013, and $0.2 million for 2012, respectively. Other Matters The Company and its subsidiaries are involved in various lawsuits, claims, investigations and proceedings including commercial, employment, consumer, personal injury and health and safety law matters, which are being handled and defended in the ordinary course of business. In addition, the Company is subject to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of products the Company sells. The Company is also audited by (or has initiated voluntary disclosure agreements with) numerous governmental agencies in various countries, including U.S. Federal and state authorities, concerning potential income tax, sales tax and unclaimed property liabilities. These matters are in various stages of investigation, negotiation and/or litigation, and are being vigorously defended. In this regard, the State of New York has claimed that certain of the Company's consumer electronics e-commerce sales are subject to sales tax in those states. The Company intends to vigorously defend these matters and believes it has strong defenses. The Company is also being audited by an entity representing 45 states seeking recovery of "unclaimed property". The Company is complying with the audit and is providing requested information. Although the Company does not expect, based on currently available information, that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial position or results of operations, the ultimate outcome is inherently unpredictable. Therefore, judgments could be rendered or settlements entered, that could adversely affect the Company's operating results or cash flows in a particular period. The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable and estimable. In this regard, the Company establishes accrual estimates for its various lawsuits, claims, investigations and proceedings when it is probable that an asset has been impaired or a liability incurred at the date of the financial statements and the loss can be reasonably estimated. At December 31, 2014 the Company has established accruals for certain of its various lawsuits, claims, investigations and proceedings based upon estimates of the most likely outcome in a range of loss or the minimum amounts in a range of loss if no amount within a range is a more likely estimate. The Company does not believe that at December 31, 2014 any reasonably possible losses in excess of the amounts accrued would be material to the financial statements. Following the previously reported independent investigation of Gilbert Fiorentino and Carl Fiorentino by our Audit Committee in 2011 (in response to a whistleblower report) for a variety of improper acts, the subsequent termination of their employment and the entering into by Gilbert Fiorentino of a settlement agreement with the Securities and Exchange Commission, on November 20, 2014 the United States Attorney’s Office (“USAO”) for the Southern District of Florida announced that Gilbert Fiorentino and Carl Fiorentino had been charged with mail fraud, wire fraud and money laundering in connection with a scheme to defraud TigerDirect and Systemax. Specifically, the charges set forth a scheme to obtain kickbacks and other benefits, and to conceal this illicit income from the IRS, all while Gilbert Fiorentino and Carl Fiorentino were employed as senior executives at the Company’s North American Technology Products business. On December 2, 2014, the United States Attorney’s Office announced that Gilbert Fiorentino and Carl Fiorentino had pled guilty to various charges, and on March 3, 2015, Gilbert Fiorentino and Carl Fiorentino were sentenced to sixty and eighty months’ imprisonment, respectively. The Court also set a restitution hearing for April 10, 2015 to determine the amount of restitution Gilbert Fiorentino and Carl Fiorentino are obligated to pay the Company. On January 27, 2015, the senior financial officer of the Company's North American Technology Products segment testified before a federal grand jury in the Southern District of Florida pursuant to a subpoena. The USAO has not advised the Company as to the nature or scope of the grand jury proceeding. Further, the Company's Audit Committee, with the assistance of independent outside counsel, is cooperating with a current investigation by the USAO into allegations arising from the Fiorentino investigation regarding possible executive officer conflicts of interest and conduct related to internal controls and books and records. The Company does not currently believe these matters have had or will have a material effect on the Company's previously reported consolidated financial statements. However, it is not possible at this time to predict when the current investigation will be completed; what subject(s) will be investigated; what actions, if any, may be taken by the government as a result of its investigation; or whether any of these matters will have a material adverse impact on the Company.

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