GNC 2012 Annual Report Download - page 99

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Table of Contents
NOTE 10. 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. 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 included the following components:
Year ended December 31,
2011 2010 2009
(in thousands)
Retail stores:
Rent on long-term operating leases $ 120,170 $ 114,861 $ 110,365
Landlord related taxes 16,940 15,929 16,498
Common operating expenses 31,969 30,402 29,398
Percent rent 20,824 17,903 15,899
189,903 179,095 172,160
Truck fleet 4,979 4,491 4,740
Other 11,883 11,557 11,189
$ 206,765 $ 195,143 $ 188,089
Rent on long-term operating leases is net of sublease income of $33.7 million, $32.6 million and $33.7 million for the years ended December 31, 2011,
2010 and 2009, respectively.
Minimum future obligations for non-cancelable operating leases with initial or remaining terms of at least one year in effect at December 31, 2011 are as
follows:
Company
Retail
Stores
Franchise
Retail
Stores Other Sublease
Income Total
(in thousands)
2012 $ 113,968 $ 23,722 $ 3,708 $ (23,722) $ 117,676
2013 92,328 17,699 3,250 (17,699) 95,580
2014 74,760 12,557 2,553 (12,557) 77,313
2015 58,071 8,740 1,431 (8,740) 59,501
2016 43,748 4,794 1,047 (4,794) 44,796
Thereafter 73,536 6,893 119 (6,893) 73,656
$ 456,412 $ 74,405 $ 12,110 $ (74,405) $ 468,520
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