Circuit City 2008 Annual Report Download - page 59

Table of Contents
At December 31, 2008, the future minimum annual lease payments for capital leases and related and third-party operating leases were as
follows (in thousands):
Annual rent expense aggregated approximately $24,993,000, $14,760,000 and $13,198,000 in 2008, 2007 and 2008, respectively. Included
in rent expense was $860,000, $612,000, and $612, 000 in 2008, 2007 and 2006, respectively, to related parties.Rent expense is net of
sublease income of $355,000, $853,000 and $937,000 for 2008, 2007 and 2006, respectively.
Litigation —
Kevin Vukson v. TigerDirect, Inc., OnRebate.com Inc. and Systemax Inc.
On October 18, 2007, Kevin Vukson filed a class action complaint in U.S. District Court (E.D.N.Y.) against TigerDirect, Inc.,
OnRebate.com Inc. and Systemax Inc. on behalf of himself and all OnRebate customers whose rebates were denied or delayed.
(OnRebate.com Inc. is a rebate processing company owned by Systemax.) Vukson’s Complaint alleges that since 2004 Systemax,
TigerDirect and OnRebate have conducted a deceptive and unlawful enterprise by failing to pay rebates that should have been paid and
delaying unnecessarily the payment of other rebates that were paid. Vukson alleges claims arising under Florida’s Unfair, Deceptive Trade
Practice Act, the federal RICO statute, along with claims for breach of contract, conspiracy to commit fraud and unjust enrichment. On
February 11, 2009 the Court dismissed Vukson’s complaint with leave to file an amended complaint by February 19, 2009 but ordered that
any amended complaint not include a request for punitive damages. On February 19, 2009 Vukson filed an amended complaint with no
request for punitive damages, as ordered by the Court. The Company intends to vigorously defend this case.
State of Florida, Office of the Attorney General Subpoena
On January 2, 2008 the Company received a subpoena for documents from the Florida Attorney General’s Office relating to the payment
and processing of rebates by the Company. The Company received subpoenas for additional documents on January 30, 2008 and on
August 25, 2008. The Company is cooperating with the Florida Attorney General’s investigation and has provided a substantial number of
documents in response to the subpoenas.
Other matters
The Company has also been named as a defendant in other lawsuits in the normal course of its business, including those involving
commercial, tax, employment and intellectual property related claims. Based on discussions with legal counsel, management believes the
ultimate resolution of these lawsuits will not have a material effect on the Company’s consolidated financial statements.
10.
SEGMENT AND RELATED INFORMATION
The Company operates and is internally managed in three operating segments, Technology Products, Industrial Products and Software
Solutions. The Company’s chief operating decision-maker is the Company’s Chief Executive Officer. The Company evaluates segment
performance based on income from operations before net interest, foreign exchange gains and losses, restructuring and other charges and
income taxes. Corporate costs not identified with the disclosed segments and restructuring and other charges are grouped as “Corporate and
other expenses.” The chief operating decision-
maker reviews assets and makes significant capital expenditure decisions for the Company on
a consolidated basis only. The accounting policies of the segments are the same as those of the Company described in Note 1.
54
Capital
Leases
Operating
Leases Total
2009
$
905
$
19,131
$
20,036
2010
746
17,176
17,922
2011
508
15,960
16,468
2012
167
14,769
14,936
2013
125
13,066
13,191
2014
-
2018
38,602
38,602
2019
-
2023
13,476
13,476
Thereafter
3,552
3,552
Total minimum lease payments
2,451
135,732
138,183
Less: sublease rental income
122
122
Lease obligation net of subleases
2,451
$
135,610
$
138,061
Less amount representing interest
267
Present value of minimum capital lease payments (including
current portion of $773)
$
2,184