GNC 2011 Annual Report Download - page 104
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Table of Contents
NOTE 14. FINANCIAL INSTRUMENTS (Continued)
these estimates. The actual and estimated fair values of the Company's financial instruments are as follows at December 31:
2010 2009
Carrying
Amount Fair
Value Carrying
Amount Fair
Value
(in thousands)
Cash and cash equivalents $ 150,641 $ 150,641 $ 75,089 $ 75,089
Receivables 104,633 104,633 94,355 94,355
Franchise notes receivable 4,496 4,496 3,364 3,364
Accounts payable 98,295 98,295 95,904 95,904
Long term debt 1,058,499 1,007,070 1,059,809 977,718
NOTE 15. LONG-TERM LEASE OBLIGATIONS
The Company enters into operating leases covering its retail store locations. The Company is the primary lessor of the majority of all leased retail store
locations and sublets the locations to individual franchisees. The leases generally provide for an initial term of between five and ten years, and may include
renewal options for varying terms thereafter. The leases require minimum monthly rental payments and a pro rata share of landlord allocated common
operating expenses. Most retail leases also require additional rentals based on a percentage of sales in excess of specified levels ("Percent rent"). According to
the individual lease specifications, real estate taxes, insurance and other related costs may be included in the rental payment or charged in addition to rent.
Other lease expenses relate to and include distribution facilities, transportation equipment, data processing equipment and automobiles.
As the Company is the primary lessee for the majority of the franchise store locations, it is ultimately liable for the lease payments to the landlord. The
Company makes the payments to the landlord directly, and then bills the franchisee for reimbursement of this cost. If a franchisee defaults on its sub-lease and
its sub-lease is terminated, the Company has in the past converted, and expects in the future to, convert any such franchise store into a corporate store and
fulfill the remaining lease obligation.
The composition of the Company's rental expense for all periods presented included the following components:
December 31,
2010 2009 2008
(in thousands)
Retail stores:
Rent on long-term operating leases, net of sublease income $ 114,861 $ 110,365 $ 109,199
Landlord related taxes 15,929 16,498 15,987
Common operating expenses 30,402 29,398 31,435
Percent rent 17,903 15,899 14,159
179,095 172,160 170,780
Truck fleet 4,491 4,740 4,363
Other 11,557 11,189 11,331
$ 195,143 $ 188,089 $ 186,474
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