O'Reilly Auto Parts 2011 Annual Report Download - page 78

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68
NOTE 11—COMMITMENTS
Operating lease commitments:
The Company leases certain office space, retail stores, property and equipment under long-term, non-cancelable operating leases.
Most of these leases include renewal options and some include options to purchase, provisions for percentage rent based on sales
and/or incremental step increase provisions.
The following table identifies the future minimum lease payments under all of the Company’s operating leases for each of the next
five years and in the aggregate as of December 31, 2011 (in thousands):
2012 $ 4,406
$
222,052
$
226,458
2013 4,346 206,244 210,590
2014 4,257 185,968 190,225
2015 3,587 158,511 162,098
2016 3,119 132,756 135,875
Thereafter 12,555 713,154 725,709
Total $ 32,270
$
1,618,685
$
1,650,955
Total
Related
Parties
Non-related
Parties
The future minimum lease payments under the Company’s operating leases, in the table above, do not include potential amounts for
percentage rent or other operating lease related costs and have not been reduced by expected future minimum sublease income.
Expected future minimum sublease income under non-cancelable subleases is approximately $14.5 million at December 31, 2011.
The following table identifies the net rent expense amounts for the years ended December 31, 2011, 2010 and 2009:
Minimum operating lease expense $ 226,158 $ 221,540 $ 220,686
Contingent rents 534 903 364
Other lease related occupancy costs 8,821 9,352 10,241
Total rent expense 235,513 231,795 231,291
Less: sublease income (4,616) (4,916) (2,157)
Net rent expense $ 230,897 $ 226,879 $ 229,134
For the Years Ended December 31,
2011
2010
2009
Other commitments:
As of December 31, 2011, the Company had construction commitments in the amount of $41.6 million.
As of December 31, 2011, the Company had outstanding letters of credit, primarily to satisfy workers’ compensation, general liability
and other insurance policies, in the amount of $59.9 million (see Note 5).
NOTE 12—LEGAL MATTERS
O’Reilly Litigation:
O’Reilly is currently involved in litigation incidental to the ordinary conduct of the Company’s business. The Company records
reserves for litigation losses in instances where a material adverse outcome is probable and the Company is able to reasonably
estimate the probable loss. The Company reserves for an estimate of material legal costs to be incurred in pending litigation matters.
Although the Company cannot ascertain the amount of liability that it may incur from any of these matters, it does not currently
believe that, in the aggregate, these matters, taking into account applicable insurance and reserves, will have a material adverse effect
on its consolidated financial position, results of operations or cash flows in a particular quarter or annual period.
In addition, O’Reilly is involved in resolving governmental investigations that were being conducted against CSK and CSK’s former
officers and other litigation, prior to its acquisition by O’Reilly, as described below.
–
FORM 10-K