2004 Notes to Consolidated Financial Statements (Dollar and Share Amounts in Thousands except Per Share Information and as Otherwise Noted)  9 Operating Leases 10 Lines of Credit and Commitments  2004 ANNUAL REPORT – PAGE 31  During 2001, the Company completed the construction of a new building for its Kansas City warehouse,  and completed an expansion of this warehouse in 2004. The Company was required to obtain financing for  the construction and expansion of this facility under an Industrial Revenue Bond (IRB). The Company  subsequently purchased 100% of the outstanding bonds under the IRB at par. In addition to purchasing the  outstanding obligations, the Company has a right of offset included in the IRB debt agreement.  Accordingly, the Company has netted the impact of the IRB in the accompanying consolidated financial  statements. The outstanding balance of the IRB was $9,733 and $6,533 at December 31, 2004 and 2003,  respectively.  The Company has a line of credit arrangement with a bank which expires December 1, 2005. The line  allows for borrowings of up to $10,000 at .9% over the LIBOR rate. On December 31, 2004 there was $0  outstanding on the line. The Company currently has a letter of credit issued on its behalf to its insurance  carrier. As of December 31, 2004, the total undrawn balance of this letter of credit was $10,000.  Certain operating leases for vehicles contain residual value guarantee provisions which would become due  at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the  guaranteed residual value. The aggregate residual value at lease expiration, of the leases that contain  residual value guarantees, is approximately $7,789. The Company believes the likelihood of funding the  guarantee obligation under any provision of the operating lease agreements is remote.  The Company leases space under non-cancelable operating leases for its California, Utah, and Washington  distribution centers, and certain store sites with initial terms of one to 48 months. These leases do not have  significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out  clauses. Any such terms are recognized as rent expense over the term of the lease. Further, the leases do  not contain contingent rent provisions. Leasehold improvements, with a net book value of $994 at  December 31, 2004, on operating leases are amortized over a 36-month period. The Company leases  certain semi-tractors and pick-ups under operating leases. The semi-tractor leases typically have a 36- month term. The pick-up leases typically have a 72-month term and include an early buy out clause the  Company generally exercises, thereby giving the leases an effective term of 12-15 months. Future  minimum annual rentals for the leased facilities and the leased vehicles are as follows:  Rent expense under all operating leases is as follows: Leased  Facilities  Leased  Vehicles Total 2005 $  34,393 11,035 45,428 2006 26,401 5,762 32,163 2007 19,478 488 19,966 2008 13,018 — 13,018 2009 and thereafter  5,564  —  5,564  $  98,854 17,285 116,139 Leased  Facilities  Leased  Vehicles Total 2004  $ 33,557  13,674  47,231  2003 $  26,438 12,912 39,350 2002 $  22,127 10,770 32,897