Einstein Bros 2009 Annual Report Download - page 56

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Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312510040721/d10k.htm[9/11/2014 10:09:50 AM]
assets under capital leases is included in depreciation and amortization expense.
70
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Operating Leases
We lease office space, restaurant space and certain equipment under operating leases having terms that expire at various dates through the
fiscal year ended 2021. Our restaurant leases have renewal clauses of 1 to 20 years at our option and, in some cases, have provisions for
contingent rent based upon a percentage of gross sales, as defined in the leases. Rent expense for fiscal years ended 2007, 2008 and 2009 was
$27.5 million, $29.3 million and $31.0 million, respectively. Contingent rent included in rent expense for fiscal years ended 2007, 2008 and 2009
was approximately $0.1 million, $0.1 million and $0.2 million, respectively. We sublease out a portion of our restaurant space on leases where we
did not need the entire space for our operations. Our sublease income was $0.5 million for both of the fiscal years ended 2007 and 2008, and was
$0.4 million for fiscal year ended 2009.
Future Minimum Lease Payments
As of December 29, 2009, future minimum lease payments under capital and operating leases were as follows:
Fiscal year:
Capital
Leases
Operating
Leases
(in thousands of dollars)
2010 $ 25 $ 31,283
2011 14 26,888
2012 3 19,238
2013 3 14,194
2014 — 11,261
2015 and thereafter — 23,958
Total minimum lease payments 45 $ 126,822
Less imputed interest (average rate of 4.75%) 4
Present value of minimum lease payments 41
Less current portion of obligations under capital leases 22
Obligations under capital leases, long-term $ 19
In addition, the total of minimum sublease rentals to be received in the future under non-cancelable subleases as of December 29, 2009 was
$1.1 million.
Purchase Commitments
We have obligations with certain of our major suppliers of raw materials (primarily frozen bagel dough) for minimum purchases both in
terms of quantity and pricing on an annual basis. Furthermore, from time to time, we will commit to the purchase price of certain commodities that
are related to the ingredients used for the production of our bagels. On a periodic basis, we review the relationship of these purchase commitments
to our business plan, general market trends and our assumptions in our operating plans. If these commitments are deemed to be in excess of the
market, we will expense the excess purchase commitment to cost of sales in the period in which the shortfall is determined. The total of our future
purchase obligations as of December 29, 2009 was approximately $10.1 million.
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Litigation
We are subject to claims and legal actions in the ordinary course of our business, including claims by or against our franchisees, licensees and