Baskin Robbins 2015 Annual Report Download - page 87

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-77-
(11) Leases
The Company is the lessee on certain land leases (the Company leases the land and erects a building) or improved leases (lessor
owns the land and building) covering restaurants and other properties. In addition, the Company has leased and subleased land
and buildings to others. Many of these leases and subleases provide for future rent escalation and renewal options. In addition,
contingent rentals, determined as a percentage of annual sales by our franchisees, are stipulated in certain prime lease and
sublease agreements. The Company is generally obligated for the cost of property taxes, insurance, and maintenance relating to
these leases. Such costs are typically charged to the sublessee based on the terms of the sublease agreements. The Company
also leases certain office equipment and a fleet of automobiles under noncancelable operating leases. Included in the
Company’s consolidated balance sheets are the following amounts related to capital leases (in thousands):
December 26,
2015
December 27,
2014
Leased property under capital leases (included in property and equipment) $ 9,457 8,982
Accumulated depreciation (3,437)(2,872)
Net leased property under capital leases $ 6,020 6,110
Capital lease obligations:
Current $ 546 506
Long-term 7,497 7,575
Total capital lease obligations $ 8,043 8,081
Capital lease obligations exclude that portion of the minimum lease payments attributable to land, which are classified
separately as operating leases. Interest expense associated with the capital lease obligations is computed using the incremental
borrowing rate at the time the lease is entered into and is based on the amount of the outstanding lease obligation. Depreciation
on capital lease assets is included in depreciation expense in the consolidated statements of operations. Included in the
Company’s consolidated balance sheets are the following amounts related to assets leased to others under operating leases,
where the Company is the lessor (in thousands):
December 26,
2015
December 27,
2014
Land $ 27,654 28,235
Buildings 43,196 43,835
Leasehold improvements 139,409 140,171
Store, production, and other equipment 221 184
Construction in progress 783 1,482
Assets leased to others, gross 211,263 213,907
Accumulated depreciation (78,453)(75,607)
Assets leased to others, net $ 132,810 138,300
Future minimum rental commitments to be paid and received by the Company at December 26, 2015 for all noncancelable
leases and subleases are as follows (in thousands):
Payments Receipts
Net
leases
Capital
leases
Operating
leases Subleases
Fiscal year:
2016 $ 1,425 56,752 (68,256)(10,079)
2017 1,448 56,758 (68,352)(10,146)
2018 1,464 55,620 (67,379)(10,295)
2019 1,288 53,659 (64,761)(9,814)
2020 1,074 50,816 (60,577)(8,687)
Thereafter 9,691 404,942 (367,925) 46,708
Total minimum rental commitments 16,390 $ 678,547 (697,250)(2,313)
Less amount representing interest 8,347
Present value of minimum capital lease
obligations $ 8,043