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43’04฀Annual฀Report
Note฀L—Commitments฀and฀Contingencies฀
Construction฀commitments,฀primarily฀for฀new฀stores,฀totaled฀approximately฀$26.4฀million฀at฀August฀28,฀2004.
The฀Company฀currently,฀and฀from฀time฀to฀time,฀is฀involved฀in฀various฀legal฀proceedings฀incidental฀to฀the฀conduct฀of฀its฀business.฀Although฀
the฀amount฀of฀liability฀that฀may฀result฀from฀these฀proceedings฀cannot฀be฀ascertained,฀the฀Company฀does฀not฀currently฀believe฀that,฀in฀the฀
aggregate,฀these฀matters฀will฀result฀in฀liabilities฀material฀to฀the฀Company’s฀financial฀condition,฀results฀of฀operations฀or฀cash฀flows.
The฀Company฀is฀self-insured฀for฀workers’฀compensation,฀automobile,฀general฀and฀product฀liability฀and฀property฀losses.฀Beginning฀in฀fiscal฀
2004,฀a฀portion฀of฀these฀self-insured฀losses฀are฀managed฀through฀a฀wholly-owned฀insurance฀captive.฀The฀captive’s฀assets฀and฀liabilities฀are฀
included,฀net฀of฀intercompany฀eliminations,฀in฀the฀consolidated฀financial฀statements฀at฀August฀28,฀2004.฀The฀Company฀is฀also฀self-insured฀
for฀health฀care฀claims฀for฀eligible฀active฀employees.฀The฀Company฀maintains฀certain฀levels฀for฀stop฀loss฀coverage฀for฀each฀self-insured฀plan.฀
Self-insurance฀costs฀are฀accrued฀based฀upon฀the฀aggregate฀of฀the฀liability฀for฀reported฀claims฀and฀an฀estimated฀liability฀for฀claims฀incurred฀
but฀not฀reported.
The฀Company฀had฀$97.2฀million฀in฀outstanding฀letters฀of฀credit฀and฀$10.8฀million฀in฀surety฀bonds฀as฀of฀August฀28,฀2004,฀which฀all฀have฀
expiration฀periods฀of฀less฀than฀one฀year.฀A฀substantial฀portion฀of฀the฀outstanding฀standby฀letters฀of฀credit฀(which฀are฀primarily฀renewed฀on฀
an฀annual฀basis)฀and฀surety฀bonds฀are฀used฀to฀cover฀reimbursement฀obligations฀to฀our฀workers’฀compensation฀carriers.฀There฀are฀no฀addi-
tional฀contingent฀liabilities฀associated฀with฀them฀as฀the฀underlying฀liabilities฀are฀already฀reflected฀in฀our฀balance฀sheet.฀The฀letters฀of฀credit฀
and฀surety฀bonds฀arrangements฀have฀automatic฀renewal฀clauses.฀
Note฀M—Segment฀Reporting฀
The฀Company฀manages฀its฀business฀on฀the฀basis฀of฀one฀reportable฀segment.฀See฀Note฀A฀for฀a฀brief฀description฀of฀the฀Company’s฀business.฀
As฀of฀August฀28,฀2004,฀the฀majority฀of฀the฀Company’s฀operations฀were฀located฀within฀the฀United฀States.฀Other฀operations฀include฀ALLDATA฀
and฀the฀Mexico฀locations,฀each฀of฀which฀comprises฀less฀than฀3฀percent฀of฀consolidated฀net฀sales,฀net฀income฀and฀total฀assets.฀The฀following฀
data฀is฀presented฀in฀accordance฀with฀Statement฀of฀Financial฀Accounting฀Standards฀No.฀131,฀“Disclosures฀about฀Segments฀of฀an฀Enterprise฀
and฀Related฀Information.”
฀ Year฀Ended
(in฀thousands)
August฀28,฀
2004 ฀
August฀30,฀
2003 ฀
August฀31,฀
2002
Primary฀business฀focus:
U.S.฀Retail $4,727,402 $4,638,361 $4,621,234
Commercial 740,480 670,010 531,776
Other 169,143
฀
148,752
฀
172,500
Net฀sales $5,637,025
฀
$5,457,123
฀
$5,325,510