Circuit City 2002 Annual Report Download - page 40

Foreign currency translation adjustments........................1,395 4,909
Accelerated depreciation........................................(853) (6,213)
Intangible and other assets.....................................15,137 (2,658)
Valuation allowances............................................(4,938) (1,805)
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Total non-current.............................................15,100 (1,557)
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Total......................................................$24,173 $ 8,093
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10. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
Related Party Third Party Total
------------- ----------- --------
2003................................ $ 612 $ 5,336 $ 5,948
2004................................ 612 4,971 5,583
2005................................ 612 4,957 5,569
2006................................ 612 4,666 5,278
2007................................ 612 3,957 4,569
2008-2012........................... 8,285 8,285
2013................................ 169 169
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$ 3,060 $ 32,341 $35,401
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The Company has not provided for federal income taxes applicable to the undistributed earnings of its foreign
subsidiaries since these earnings are indefinitely reinvested. The Company has foreign net operating loss
carryforwards which expire from 2003 through 2010 except for carryforwards in the Netherlands, which have no
expiration. In accordance with SFAS 109 "Accounting for Income Taxes", the Company records these benefits as
assets to the extent that utilization of such assets is more likely than not; otherwise, a valuation allowance has
been recorded. The Company has also provided valuation allowances for certain state net operating loss
carryforwards where it is not likely they will be realized.
Leases
- The Company is obligated under operating lease agreements for the rental of certain office and
warehouse facilities and equipment which expire at various dates through September 2013. The Company
currently leases one facility in New York from an entity owned by the Company's three principal shareholders
and senior executive officers (see Note 4).
At December 31, 2002 future minimum annual lease payments for related and third-party leases were as follows
(in thousands):
Annual rent expense aggregated approximately $8,164,000, including $1,071,000 to related parties, for 2002,
$7,869,000, including $1,224,000 to related parties, for 2001 and $8,580,000, including $1,314,000 to related
parties, for 2000.
Guarantees - The Company has provided financial guarantees from time to time to a number of vendors on
behalf of its 50%-owned join venture (see Note 1) for trade obligations in the normal course of its business. The
amount of such guarantees is limited to $7 million pursuant to the terms of the Company's revolving credit
agreement. As of December 31, 2002 the amount of such guarantees totaled $0.3 million.
Litigation
– In June 2002 the Company filed a complaint in the U. S. District Court for the Eastern District of
New York against the software developers of a new customer order management software system that was being
written for the Company's internal use, seeking restitution of all payments and other damages totaling
approximately $19 million. The software developers have filed an answer and counterclaims, denying the
Company's allegations and seeking approximately $9.4 million in damages. The Company believes that the
claims of the software developers are without merit. The Company has also been named as a defendant in other
lawsuits incidental to its business. Management of the Company, based on discussions with legal counsel,
believes the ultimate resolution of these lawsuits will not have a material effect on the Company's consolidated
financial position or results of operations.