Commitments and Contingencies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 04, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
Commitments and Contingencies
Facilities Leases
The Company’s corporate headquarters is located in Carson, California. The Company’s corporate headquarters has an initial lease term of five years through October 2016, and an option to renew through January 2020. The Company leases warehouse space in Chesapeake, Virginia under an agreement scheduled to expire in June 2016. The Company’s Philippines subsidiary leases office space under an agreement through April 2020.
Facility rent expense for the thirteen and twenty-six weeks ended July 4, 2015 was $399 and $764, respectively, compared to $612 and $1,075, for the thirteen and twenty-six weeks ended June 28, 2014, respectively. The year over year decline is primarily due to the closure of the Carson warehouse facility last year. The Company’s facility rent expense was inclusive of amounts charged from a related party during the thirteen and twenty-six weeks ended June 28, 2014 of $237 and $331, respectively.
Minimum lease commitments under non-cancellable operating leases as of July 4, 2015 were as follows (in thousands):
On April 17, 2013, the Company entered into a sale lease-back transaction with STORE whereby we leased back our facility located in LaSalle, Illinois for our continued use as an office, retail and warehouse facility for storage, sale and distribution of automotive parts, accessories and related items for 20 years commencing upon the execution of the lease and terminating on April 30, 2033. The lease was accounted for as a capital lease and the $376 excess of the net proceeds over the net carrying amount of the property is amortized in interest expense on a straight-line basis over the lease term of 20 years.
Capital lease commitments as of July 4, 2015 were as follows (in thousands):
The Company entered into purchase commitments in March 2015 for certain warehouse equipment for our LaSalle, Illinois facility. A portion of the equipment totaling $368 was received in June 2015 and has been included in the financial statements and minimum payments shown above. The remaining equipment is expected to be received in July 2015, the payments of which total $1,227 and will commence in July 2015 and end in June 2020. Such amounts have been excluded from the financial statements and minimum payments shown above.
Legal Matters
Asbestos. A wholly-owned subsidiary of the Company, Automotive Specialty Accessories and Parts, Inc. and its wholly-owned subsidiary WAG, are named defendants in several lawsuits involving claims for damages caused by installation of brakes during the late 1960’s and early 1970’s that contained asbestos. WAG marketed certain brakes, but did not manufacture any brakes. WAG maintains liability insurance coverage to protect its and the Company’s assets from losses arising from the litigation and coverage is provided on an occurrence rather than a claims made basis, and the Company is not expected to incur significant out-of-pocket costs in connection with this matter that would be material to its consolidated financial statements.
The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. As of the date hereof, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flow of the Company. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations.
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