O'Reilly Auto Parts 2014 Annual Report Download - page 68

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FORM 10-K
61
litigation commenced by the Department of Justice and SEC against CSK's former employees. Whether those legal fees and costs are
covered by CSK's insurance is subject to uncertainty, and, given its complexity and scope, the final outcome cannot be predicted at this
time. O'Reilly has a remaining reserve, with respect to the indemnification obligations of $11.6 million at December 31, 2014, which
relates to the payment of those legal fees and costs already incurred. It is possible that in a particular quarter or annual period the
Company's results of operations and cash flows could be materially affected by resolution of such matter, depending, in part, upon the
results of operations or cash flows for such period. However, at this time, management believes that the ultimate outcome of this matter,
after consideration of applicable reserves, should not have a material adverse effect on the Company's consolidated financial condition,
results of operations or cash flows.
NOTE 12 – RELATED PARTIES
The Company leases certain land and buildings related to 77 of its O'Reilly Auto Parts stores and one of its bulk facilities under fifteen-
or twenty-year operating lease agreements with entities in which certain of the Company's affiliated directors, members of an affiliated
director's immediate family or certain of the Company's executive officers, are affiliated. Generally, these lease agreements provide for
renewal options for an additional five years at the option of the Company and the lease agreements are periodically modified to further
extend the lease term for specific stores under the agreements. Lease payments under these operating leases totaled $4.6 million, $4.4
million and $4.4 million during the years ended December 31, 2014, 2013 and 2012, respectively. The Company believes that the lease
agreements with the affiliated entities are on terms comparable to those obtainable from third parties. See Note 6 for further information
on the Company's operating leases.
NOTE 13 – INCOME TAXES
Deferred income tax assets and liabilities:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes, and also include the tax effect of carryforwards.