NOTE 11 – COMMITMENTS AND CONTINGENCIES

Leases

We are obligated under capital leases covering vehicles and certain equipment. Total assets relating to capital leases were $65,238 and $54,004 as of December 31, 2014 and 2013, respectively, and a total of $20,499 and $22,160 were fully depreciated as of December 31, 2014 and 2013, respectively. The vehicles and equipment leases generally have terms ranging from four to six years. The net book value of assets under capital leases was $28,754 and $23,623 as of December 31, 2014 and 2013, respectively, net of accumulated depreciation of $36,484 and $30,382, respectively. Amortization of assets held under capital leases is included with depreciation expense on the Consolidated Statements of Operations.

We also have several noncancellable operating leases, primarily for buildings, improvements, equipment, and certain vehicles. These leases generally contain renewal options for periods ranging from one to five years and require us to pay all executory costs such as property taxes, maintenance and insurance.

Future minimum lease payments under noncancellable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments as of December 31, 2014 are as follows:


	Capital Leases			Operating Leases
				Related Party		Other		Total Operating
2015	$	11,151		$	434	$	5,880	$	6,314
2016		8,747			356		4,794		5,150
2017		5,768			150		2,994		3,144
2018		3,334			83		1,236		1,319
2019		1,869			—		951		951
Thereafter		33			—		2,120		2,120

		30,902		$	1,023	$	17,975	$	18,998

Less: Amounts representing executory costs		(874	)
Less: Amounts representing interest		(3,146	)

Total obligation under capital leases		26,882
Less: Current portion of capital leases		(9,374	)

Long term capital lease obligation	$	17,508

Total rent expense under these operating leases for the years ended December 31, 2014, 2013 and 2012 was $7,871, $7,171 and $6,343, respectively, which is included in the Consolidated Statements of Operations as follows:


	Years ended December 31,
	2014		2013		2012
Cost of Sales	$	733	$	573	$	435
Selling		34		32		113
Administrative		7,104		6,566		5,795

Total	$	7,871	$	7,171	$	6,343

Supply Contract Commitments

As of December 31, 2014, we had two product supply contracts, one extending through December 31, 2015 and one extending through August 31, 2017. Our obligations for both contracts are based on quantity without a specific rate applied and therefore are not quantifiable. We expect our quantity purchases to exceed the minimum quantity commitments for all years covered by the contracts. Actual purchases made under the contracts for the years ended December 31, 2014 and 2013 were $53,084 and $25,884, respectively.

Other Commitments and Contingencies

A class action lawsuit was filed in February 2013 and an amended complaint was filed in May 2013 in the Superior Court of King County, Washington, involving Installed Building Products II, LLC, one of our subsidiaries, alleging violations of Washington State wage and hour laws for failure to pay prevailing and minimum wage and overtime wages. The plaintiffs were former insulation installers for Installed Building Products II, LLC in Washington who sought to represent all similarly situated workers. They sought all unpaid wages, along with litigation costs and fees.

A lawsuit was filed in July 2013 in federal court in the Middle District of Tennessee against one of our subsidiaries, TCI d/b/a Installed Building Products of Nashville, alleging unpaid overtime and failure to pay lawful wages under federal law and Tennessee common law and in unjust enrichment and in breach of an alleged contract. The named plaintiffs were former insulation installers in Nashville. The plaintiffs sought to have this case certified as a collective action under the Federal Fair Labor Standards Act and as a class action under Tennessee law. They sought reimbursement of the overtime wages for all time worked over forty hours each week, as well as liquidated damages and litigation costs and fees.

We recorded $1,407 of settlement expenses in the year ended December 31, 2013. Both lawsuits were settled in January 2014 and approved by the court by April 2014. Approximately $1,200 of this cost was recorded as an accrued expense included in other current liabilities on our Consolidated Balance Sheet as of December 31, 2013. All remaining expenses were paid during the year ended December 31, 2014 and therefore no accrued expense remained as of December 31 2014.

From time to time, various claims and litigation are asserted or commenced against us principally arising from contractual matters and personnel and employment disputes. In determining loss contingencies, management considers the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recorded when it is considered probable that such a liability has been incurred and when the amount of loss can be reasonably estimated. It is not certain that we will prevail in these matters. However, we do not believe that the ultimate outcome of any pending matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.