Advance Auto Parts 2007 Annual Report Download - page 86

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
December 29, 2007, December 30, 2006 and December 31, 2005
(in thousands, except per share data)
Net rent expense for fiscal 2007, fiscal 2006 and fiscal 2005 was as follows:
2007 2006 2005
Minimum facility rentals 245,135$ 217,588$ 191,897$
Contingent facility rentals 730 1,090 1,334
Equipment rentals 5,490 5,735 4,128
Vehicle rentals 14,572 13,554 11,316
265,927 237,967 208,675
Less: Sub-lease income (4,038) (4,166) (3,665)
261,889$ 233,801$ 205,010$
Rent expense associated with closed locations is included in other selling, general and administrative expenses.
14. 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 legal matters and tax matters not subject to FIN 48,
which are subject to change as events evolve, and as additional information becomes available during the
administrative and litigation process.
The Company’s Western Auto subsidiary, together with other defendants including automobile manufacturers,
automotive parts manufacturers and other retailers, has been named as a defendant in lawsuits alleging injury as a
result of exposure to asbestos-containing products. The Company and some of its subsidiaries also have been named
as defendants in many of these lawsuits. The plaintiffs have alleged that these products were manufactured,
distributed and/or sold by the various defendants. To date, these products have included brake and clutch parts and
roofing materials. Many of the cases pending against the Company or its subsidiaries are in the early stages of
litigation. The damages claimed against the defendants in some of these proceedings are substantial. Additionally,
some of the automotive parts manufacturers named as defendants in these lawsuits have declared bankruptcy, which
will limit plaintiffs’ ability to recover monetary damages from those defendants. Although the Company diligently
defends against these claims, the Company may enter into discussions regarding settlement of these and other
lawsuits, and may enter into settlement agreements, if it believes settlement is in the best interests of the Company’s
shareholders. The Company believes that most of these claims are at least partially covered by insurance. Based on
discovery to date, the Company does not believe the cases currently pending will have a material adverse effect on
the Company’s operating results, financial position or liquidity. However, if the Company was to incur an adverse
verdict in one or more of these claims and was ordered to pay damages that were not covered by insurance, these
claims could have a material adverse affect on its operating results, financial position and liquidity. If the number of
claims filed against the Company or any of its subsidiaries alleging injury as a result of exposure to asbestos-
containing products increases substantially, the costs associated with concluding these claims, including damages
resulting from any adverse verdicts, could have a material adverse effect on its operating results, financial position
or liquidity in future periods.
The Company is involved in various types of legal proceedings arising from claims of employment
discrimination or other types of employment matters as a result of claims by current and former employees. The
damages claimed against the Company in some of these proceedings are substantial; however, because of the
uncertainty of the outcome of such legal proceedings and because the Company’s liability, if any, arising from such
legal matters, including the size of any damages awarded if plaintiffs are successful in litigation or any negotiated
settlement, could vary widely, the Company cannot reasonably estimate the possible loss or range of loss which may
arise. The Company is also involved in various other claims and legal proceedings arising in the normal course of
business. Although the final outcome of these legal matters cannot be determined, based on the facts presently
known, it is management’s opinion that the final outcome of such claims and lawsuits will not have a material
adverse effect on the Company’s financial position, results of operations or liquidity.
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