Chili's 2006 Annual Report Download - page 68

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F-22
(b) Operating Leases
We lease restaurant facilities, office space, and certain equipment underoperating leases having terms
expiring at various dates through fiscal 2095. The restaurant leases have renewal clauses of 1to 35 years at
our option and, in some cases, have provisions for contingent rent based upon a percentage of sales in
excess of specified levels,as defined in the leases. Rent expense for fiscal 2006,2005, and 2004 was
$138.8 million, $119.2 million, and $110.3 million, respectively. Contingent rent included in rent expense
for fiscal 2006, 2005, and 2004 was $12.7 million,$11.6 million, and $11.0 million, respectively.
(c) Commitments
As of June 28, 2006, future minimum lease payments on capital and operating leases were as follows
(in thousands):
Fiscal Year
Capital
Leases
Operating
Leases
2007.................................................... $4,771 $113,137
2008.................................................... 4,859 108,120
2009.................................................... 4,948 101,593
2010.................................................... 5,040 93,378
2011.................................................... 5,134 84,382
Thereafter .............................................. 55,062 389,625
Total minimum lease payments ......................... 79,814 $ 8 90,235
Imputed interest (average rate of7%) ................... (29,981)
Present valueof minimum lease payments ................ 49,833
Less currentinstallments ............................... (1,565)
$48,268
As of June 28, 2006, we had entered into other lease agreements for restaurant facilities currently
under construction or yet to be constructed. Classification of these leases as capital or operating has not
been determined as construction of the leased properties has not been completed.
10. STOCK-BASED COMPENSATION
In October 2005, our shareholders approved the Performance Share Plan, the Restricted Stock Unit
Plan, and amendments to the 1998 Stock Option and Incentive Plan and the 1999 Stock Option and
Incentive Plan for Non-Employee Directors and Consultants (collectively, the “Plans”),authorizing the
issuance of up to 22.2 million shares of our commonstock to employees and non-employee directors and
consultants. The Plans provide for grants of options to purchaseour common stock, restricted stock,
restricted stock units, performance shares and stock appreciation rights.
(a) Stock Options
Expense related to stock options issued to eligible employees under the Plans isrecognized using a
graded-vesting schedule over the vesting period. For options granted after the adoption of SFAS 123R on
June 30, 2005, expense is recognized to thedate on which retirementeligibility is achieved, if shorter than
the vesting period. Stock options generally vest over a period of 1 to 4 years and have contractualterms to
exercise of 8 to 10 years.