Advance Auto Parts 2003 Annual Report Download - page 42

These amounts are recorded in other current assets,
other current liabilities, other assets and other long-term
liabilities in the accompanying consolidated balance sheets,
as appropriate.
The Company currently has four years that are open to
audit by the Internal Revenue Service. In addition, various
state and foreign income tax returns for several years are
open to audit. In management’s opinion, any amounts
assessed will not have a material effect on the Company’s
financial position or results of operations.
Additionally, the Company has certain periods open to
examination by taxing authorities in various states and
foreign jurisdictions for sales, use and excise taxes. In man-
agement’s opinion, any amounts assessed will not have a
material effect on the Company’s financial position or
results of operations.
16—Lease Commitments
The Company leases store locations, distribution centers,
office space, equipment and vehicles under lease arrange-
ments that extend through 2024, some of which are with
related parties.
At January 3, 2004, future minimum lease payments due
under non-cancelable operating leases are as follows:
Related
Other(a) Parties(a) Total
2004............................................ $ 160,703 $3,119 $ 163,822
2005............................................ 139,748 2,772 142,520
2006............................................ 123,167 2,244 125,411
2007............................................ 108,343 620 108,963
2008............................................ 90,206 461 90,667
Thereafter................................... 386,718 169 386,887
$1,008,885 $9,385 $1,018,270
(a) The Other and Related Parties columns include stores closed as a result of the
Company’s restructuring plans.
At January 3, 2004 and December 28, 2002, future mini-
mum sublease income to be received under non-cancelable
operating leases is $9,487 and $9,937, respectively.
Net rent expense for fiscal 2003, fiscal 2002 and fiscal
2001 was as follows:
2003 2002 2001
Minimum facility rentals.......... $154,461 $140,929 $122,512
Contingent facility rentals........ 1,395 1,059 811
Equipment rentals..................... 5,117 6,112 2,341
Vehicle rentals .......................... 7,104 6,419 6,339
168,077 154,519 132,003
Less: Sublease income ............. (3,223) (3,250) (2,558)
$164,854 $151,269 $129,445
Contingent facility rentals are determined on the basis
of a percentage of sales in excess of stipulated minimums
for certain store facilities as defined in the individual lease
agreements. Most of the leases provide that the Company
pay taxes, maintenance, insurance and certain other
expenses applicable to the leased premises and include
options to renew. Certain leases contain rent escalation
clauses, which are recorded on a straight-line basis. Manage-
ment expects that, in the normal course of business, leases
that expire will be renewed or replaced by other leases.
Rental payments to related parties of approximately
$3,011 in fiscal 2003, $3,168 in fiscal 2002 and $3,824 in
fiscal 2001 are included in net rent expense for open stores.
Rent expense associated with closed locations is included in
other selling, general and administrative expenses.
17—Installment Sales Program
A subsidiary of the Company maintains an in-house
finance program, which offers financing to retail cus-
tomers. Finance charges of $3,380, $3,901 and $3,343 on
the installment sales program are included in net sales in the
accompanying consolidated statements of operations for the
fiscal years ended January 3, 2004, December 28, 2002 and
December 29, 2001, respectively. The cost of administering
the installment sales program is included in selling, general
and administrative expenses.
18—Contingencies
In the case of all known contingencies, the Company
accrues for an obligation, including estimated legal costs,
when it is probable and the amount is reasonably estimable.
As facts concerning contingencies become known to the
Company, the Company reassesses its position with respect
to accrued liabilities and other potential exposures.
Estimates that are particularly sensitive to future change
include tax and legal matters, which are subject to change
as events evolve and as additional information becomes
available during the administrative and litigation process.
In February 2000, the Coalition for a Level Playing Field
and over 100 independent automotive parts and accessories
aftermarket warehouse distributors and jobbers filed a lawsuit
styled Coalition for a Level Playing Field, et al. v. AutoZone,
Inc. et al., Case No. 00-0953 in the United States District
Court for the Eastern District of New York against various
automotive parts and accessories retailers. In March 2000, the
Company was notified that it had been named defendants in
the lawsuit. The plaintiffs claimed that the defendants
knowingly induced and received volume discounts, rebates,
slotting and other allowances, fees, free inventory, sham
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
January 3, 2004, December 28, 2002 and December 29, 2001
(in thousands, except per share data)
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