Advance Auto Parts 2008 Annual Report Download - page 83

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
January 3, 2009, December 29, 2007 and December 30, 2006
(in thousands, except per share data)
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
F-29
The Company anticipates its future minimum lease payments will be off-set by future minimum sub-lease
income. At January 3, 2009 and December 29, 2007, future minimum sub-lease income to be received under non-
cancelable operating leases is $5,042 and $7,596, respectively.
Net Rent Expense
Net rent expense for fiscal 2008, 2007 and 2006 was as follows:
2008 2007 2006
Minimum facility rentals 261,315$ 245,135$ 217,588$
Contingent facility rentals 642 730 1,090
Equipment rentals 4,338 5,490 5,735
Vehicle rentals 17,202 14,572 13,554
283,497 265,927 237,967
Less: Sub-lease income (3,940) (4,038) (4,166)
279,557$ 261,889$ 233,801$
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