Advance Auto Parts 2005 Annual Report Download - page 55

Advance Auto Parts I Annual Report 2005 I 53
Temporary differences which give rise to significant
deferred income tax assets (liabilities) are as
follows:
December 31, January 1,
2005 2005
Current deferred
income tax liabilities
Inventory differences ................ $(68,250) $(57,127)
Accrued medical and
workers compensation............ 16,134 13,701
Accrued expenses not
currently deductible for tax.... 16,661 15,194
Net operating
loss carryforwards.................. 326 2,152
Tax credit carryforwards........... —419
Total current deferred income
tax assets (liabilities) ............... $(35,129) $(25,661)
Long-term deferred
income tax liabilities
Property and equipment............ (44,900) (52,605)
Postretirement
benefit obligation................... 6,649 6,975
Net operating
loss carryforwards.................. 1,253 1,568
Valuation allowance .................. (1,104) (1,029)
Other, net................................... 1,144 1,455
Total long-term deferred
income tax assets (liabilities)... $(36,958) $(43,636)
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 certain years that are
open to audit by the Internal Revenue Service. In
addition, the Company has certain years that are open
for audit by various state and foreign jurisdictions for
income taxes and 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, results of operations or liquidity.
16. LEASE COMMITMENTS:
The Company leases certain store locations, distri-
bution centers, office space, equipment and vehicles,
some of which are with related parties. Initial terms
for facility leases are typically 10 to 15 years, fol-
lowed by additional terms containing renewal options
at 5 year intervals, and may include rent escalation
clauses. The total amount of the minimum rent is
expensed on a straight-line basis over the initial term
of the lease unless external economic factors exist
such that renewals are reasonably assured, in which
case the Company would include the renewal period
in its amortization period. In addition to minimum
fixed rentals, some leases provide for contingent
facility rentals. Contingent facility rentals are deter-
mined 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 pays taxes,
maintenance, insurance and certain other expenses
applicable to the leased premises and include options
to renew. Management expects that, in the normal
course of business, leases that expire will be renewed
or replaced by other leases.
At December 31, 2005, future minimum lease pay-
ments due under non-cancelable operating leases
with lease terms ranging from one year through the
year 2024 are as follows:
Related
Other (a) Parties (a) Total
2006 ................................ $ 214,702 $ 2,345 $ 217,047
2007 ................................ 192,880 2,020 194,900
2008 ................................ 175,219 1,937 177,156
2009 ................................ 155,255 1,652 156,907
2010 ................................ 134,040 1,584 135,624
Thereafter........................ 764,474 2,130 766,604
$1,636,570 $11,668 $1,648,238
(a) The Other and Related Parties columns include stores closed
as a result of the Company’s restructuring plans.
At December 31, 2005 and January 1, 2005, future
minimum sub-lease income to be received under non-
cancelable operating leases is $7,929 and $8,413,
respectively.
Net rent expense for fiscal 2005, fiscal 2004 and
fiscal 2003 was as follows:
2005 2004 2003
Minimum facility rentals....... $191,897 $169,449 $154,461
Contingent facility rentals ..... 1,334 1,201 1,395
Equipment rentals.................. 4,128 5,128 5,117
Vehicle rentals ....................... 11,316 6,007 7,104
208,675 181,785 168,077
Less: Sub-lease income ......... (3,665) (3,171) (3,223)
$205,010 $178,614 $164,854
Rental payments to related parties of approximately
$2,925 in fiscal 2005, $3,044 in fiscal 2004 and
$3,011 in fiscal 2003 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