Supercuts 2003 Annual Report Download - page 72

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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
Future Minimum Lease Payments:
As of June 30, 2003, future minimum lease payments (excluding percentage rents based on sales) due under existing noncancellable operating
leases with remaining terms of greater than one year are as follows:
In addition to the amounts listed in the table above, the Company is guarantor on a limited number of equipment lease agreements between its
franchisees and leasing companies. If the franchisee should fail to make payments in accordance with the lease, the Company will be held
liable under such agreements and retains the right to possess the related salon operations. The Company believes the fair value of the salon
operations exceeds the maximum potential amount of future lease payments for which it could be held liable. The existing guaranteed lease
obligations, which have an aggregate undiscounted value of $6.6 million at June 30, 2003, terminate at various dates between December 2003
and March 2009. Management has not experienced and does not expect any material loss to result from these arrangements.
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 continue to enter into transactions to acquire established hair care
salons and businesses.
Contingencies:
The Company is self-insured for most workers’ compensation and general liability losses 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.
68
Fiscal year (Dollars in thousands)
Corporate Reimbursable
leases
franchisee leases
2004
$
165,195
$
35,387
2005
140,656
29,393
2006
113,286
22,094
2007
89,033
14,511
2008
65,248
7,532
Thereafter
127,978
9,263
Total minimum lease payments
$
701,396
$
118,180