Napa Auto Parts 2007 Annual Report Download - page 36

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notes฀to฀consolidated฀financial฀statements฀(continued)
december฀31,฀2007
Amounts outstanding under the Company’s credit facilities
consist of the following:
(in thousands) December 31, 2007 2006
Unsecured term notes:
November 30, 2002, Series A Senior
Notes, $250,000,000, 5.86% fixed,
due November 30, 2008 $ 250,000 $ 250,000
November 30, 2002, Series B Senior
Notes, $250,000,000, 6.23% fixed,
due November 30, 2011 250,000 250,000
Total debt 500,000 500,000
Less debt due within one year 250,000 –
Long-term debt, excluding
current portion $ 250,000 $ 500,000
Approximate maturities under the Company’s credit facilities
are as follows (in thousands):
2008 $ 250,000
2009 –
2010 –
2011 250,000
$ 500,000
4. Leased Properties
In June 2003, the Company completed an amended and re-
stated master agreement to our $85,000,000 construction and
lease agreement (the Agreement). e lessor in the Agreement
is an independent third-party limited liability company, which
has as its sole member a publicly traded corporation. Proper-
ties acquired by the lessor are constructed and/or then leased to
the Company under operating lease agreements. No additional
properties are being added to this Agreement, as the construction
term has ended. e Company does not believe the lessor is a
variable interest entity, as defined in FASB Interpretation
No. 46(R), Consolidation of Variable Interest Entities, an interpre-
tation of ARB No. 51 (FIN No. 46). In addition, the Company has
verified that even if the lessor was determined to be a variable
interest entity, the Company would not have to consolidate the
lessor nor the assets and liabilities associated with properties
leased to the Company. is is because the assets leased under
the Agreement do not exceed 50% of the total fair value of the
lessor’s assets, excluding any assets that should be excluded from
such calculation under FIN No. 46, nor did the lessor finance
95% or more of the leased balance with non-recourse debt, target
equity or similar funding. e Agreement has been accounted for
as an operating lease under SFAS No. 13, Accounting for Leases
(SFAS No. 13) and related interpretations. Future minimum
rental commitments under the Agreement have been included in
the table of future minimum payments below.
Rent expense related to the Agreement is recorded under
selling, administrative, and other expenses in our consolidated
statements of income and was $4,877,000, $4,797,000, and
$3,338,000 for the years ended December 31, 2007, 2006,
and 2005, respectively.
In October 2007, the Company entered into a sale-leaseback
transaction with a financial institution. In connection with the
transaction, the Company sold certain automotive retail store
properties and immediately leased the properties back over a
lease term of twenty years. e lease was classified as an op-
erating lease. Net proceeds from the transaction amounted to
approximately $56,000,000. e Company realized a net gain
of approximately $20,000,000, which was deferred and is being
amortized over the lease term. e deferred gain is included in
other long-term liabilities in the consolidated balance sheet at
December 31, 2007.
At December 31, 2007 and 2006, buildings include $15,400,000
with accumulated depreciation of $8,336,000 and $6,917,000,
respectively, for leases of distribution centers and stores capital-
ized. Depreciation expense for capital leases was approximately
$2,509,000, $4,585,000, and $3,466,000 in 2007, 2006, and
2005, respectively.
Future minimum payments, by year and in the aggregate, under
the capital and noncancelable operating leases with initial or
remaining terms of one year or more consisted of the following
at December 31, 2007 (in thousands):
Capital Operating
Leases Leases
2008 $ 2,344 $ 131,659
2009 2,158 98,182
2010 1,760 73,756
2011 1,092 54,935
2012 913 42,926
ereafter 2,839 182,619
Total minimum lease payments 11,106 $ 584,077
Amounts representing interest 4,041
Present value of future
minimum lease payments $ 7,065
Rental expense for operating leases was approximately
$153,273,000 in 2007, $147,727,000 in 2006, and $147,187,000
in 2005.