Supercuts 2011 Annual Report Download - page 128

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. COMMITMENTS AND CONTINGENCIES: (Continued)
Statement of Operations. In most cases, the amount of rental income related to sublease arrangements with franchisees approximates the amount
of rent expense from the primary lease, thereby having no net impact on rent expense or net income (loss). However, in limited cases, the
Company charges a ten percent mark-up in its sublease arrangements. The net rental income resulting from such arrangements totaled
$0.5 million for fiscal year 2011, and $0.4 million for each fiscal year 2010 and 2009, and was classified in the royalties and fees caption of the
Consolidated Statement of Operations.
Total rent expense, excluding rent expense on premises subleased to franchisees, includes the following:
As of June 30, 2011, future minimum lease payments (excluding percentage rents based on sales) due under existing noncancelable
operating leases with remaining terms of greater than one year are as follows:
Salon Development Program:
As a part of its salon development program, the Company continues to negotiate and enter into leases and commitments for the acquisition
of equipment and leasehold improvements related to future salon locations, and continues to enter into transactions to acquire established hair
care salons.
Contingencies:
The Company is self-insured for most workers' compensation, employment practice liability, and general liability. Workers' compensation
and general liability losses are subject to per occurrence and aggregate annual liability limitations. The Company is insured for losses in excess
of these limitations. The Company is also self-insured for health care claims for eligible participating employees subject to certain deductibles
and limitations. The Company determines its liability for claims incurred but not reported on an actuarial basis.
123
2011 2010 2009
(Dollars in thousands)
Minimum rent
$
260,644
$
259,984
$
260,140
Percentage rent based on
sales
9,225
10,138
11,623
Real estate taxes and other
expenses
72,417
73,976
76,029
$
342,286
$
344,098
$
347,792
Fiscal year
Corporate
leases
Franchisee
leases
Guaranteed
leases
(Dollars in thousands)
2012
$
266,339
$
43,549
$
2,150
2013
216,435
35,135
1,215
2014
164,420
26,686
787
2015
115,048
18,269
552
2016
68,458
9,871
409
Thereafter
87,410
7,653
483
Total minimum lease
payments
$
918,110
$
141,163
$
5,596