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7. Leases
Leasing Arrangements as a Lessor
The Company’s leasing activities consist principally of leasing certain land and buildings as well as subleasing certain
buildings to franchise operators. The land and building portions of all leases are classified as operating leases with lease
terms expiring through September 2030. These leases include provisions for contingent rentals that may be received on the
basis of a percentage of sales in excess of stipulated amounts. Income is not recognized on contingent rentals until sales
exceed the stipulated amounts. Some leases contain escalation clauses over the lives of the leases. For property owned by
third parties, the lease term runs concurrently with the term of the third-party lease arrangement. Most of the leases contain
renewal options at the end of the initial term for periods of five years.
Future minimum rental payments receivable as of August 31, 2015, are as follows:
Operating
Years ended August 31:
2016 $ 5,905
2017 6,245
2018 6,667
2019 7,084
2020 7,440
Thereafter 36,481
$ 69,822
Leasing Arrangements as a Lessee
Certain Company Drive-Ins lease land and buildings from third parties. These leases, with lease terms expiring through
August 2030, include provisions for contingent rents that may be paid on the basis of a percentage of sales in excess of
stipulated amounts. For the majority of leases, the land portions are classified as operating leases, and the building portions
are classified as capital leases.
Future minimum rental payments required under operating leases and maturities under capital leases that have initial
or remaining noncancelable lease terms in excess of one year as of August 31, 2015, are as follows:
Operating Capital
Years ended August 31:
2016 $ 11,374 $ 5,254
2017 10,992 5,004
2018 11,058 4,401
2019 10,767 3,517
2020 10,207 3,177
Thereafter 68,998 9,883
Total minimum lease payments(1) $ 123,396 31,236
Less amount representing interest averaging 6.3% (6,796)
Present value of net minimum lease payments 24,440
Less amount due within one year (3,677)
Amount due after one year $ 20,763
(1) Minimum payments have not been reduced by future minimum rentals receivable under noncancelable operating and
capital subleases of $9.5 million and $1.4 million, respectively. They also do not include contingent rentals which may
be due under certain leases. Contingent rentals for capital leases amounted to $1.0 million in fiscal year 2015 and to
$0.8 million in fiscal years 2014 and 2013.
Notes to Consolidated Financial Statements
August 31, 2015, 2014 and 2013 (In thousands, except per share data)
35