Supercuts 2008 Annual Report Download - page 101

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. COMMITMENTS AND CONTINGENCIES: (Continued)
$8.7 million. The lease agreement includes an option to purchase the property or extend the original term for two successive periods of five
years.
Rent expense in the Consolidated Statement of Operations excludes $29.9, $27.4 and $28.9 million in fiscal years 2008, 2007 and 2006,
respectively, of rent expense on premises subleased to franchisees. These amounts are netted against the related rental income on the sublease
arrangements with franchisees. In most cases, the amount of rental income related to sublease arrangements with franchisees approximates the
amount of rent expense from the primary lease, thereby having no net impact on rent expense or net income. However, in limited cases, the
Company charges a ten percent mark-
up in its sublease arrangements. The net rental income resulting from such arrangements totaled $0.4, $0.5,
and $0.5 million for fiscal years 2008, 2007 and 2006, respectively, and was classified in the royalties and fees caption of the Consolidated
Statement of Operations.
Total rent expense, excluding rent expense on premises subleased to franchisees, includes the following:
As of June 30, 2008, future minimum lease payments (excluding percentage rents based on sales) due under existing noncancelable
operating leases with remaining terms of greater than one year are as follows:
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 continues to enter into transactions to acquire established hair
care salons.
Contingencies:
The Company is self-insured for most workers' compensation, employment practice liability, and general liability. Worker's compensation
and general liability losses are subject to per occurrence and
99
2008
2007
2006
(Dollars in thousands)
Minimum rent
$
301,945
$
283,862
$
262,166
Percentage rent based on sales
15,798
16,215
15,036
Real estate taxes and other expenses
88,527
82,743
73,724
$
406,270
$
382,820
$
350,926
Fiscal year
Corporate
leases
Franchisee
leases
(Dollars in thousands)
2009
$
312,396
$
46,208
2010
262,609
39,385
2011
205,403
30,615
2012
151,562
20,364
2013
106,178
10,997
Thereafter
192,374
9,203
Total minimum lease payments
$
1,230,522
$
156,772