Annual report pursuant to Section 13 and 15(d)

Note 9 - Leases

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Note 9 - Leases
12 Months Ended
Dec. 25, 2016
Notes to Financial Statements  
Leases of Lessee Disclosure [Text Block]
(9)
Leases
 
At
December
25,
2016,
all of the Company-owned Ruth’s Chris Steak House restaurants operated in leased premises, with the exception of the restaurant in Ft. Lauderdale, FL, which is an owned property, and the restaurants in Anaheim, CA, Lake Mary, FL, Princeton, NJ and South Barrington, IL, which operate on leased land. The leases generally provide for minimum annual rental payments and are subject to escalations based, in some cases, upon increases in the Consumer Price Index, real estate taxes and other costs. In addition, certain leases contain contingent rental provisions based upon the sales at the underlying restaurants. Certain leases also provide for rent deferral during the initial term of such lease and/or scheduled minimum rent increases during the terms of the leases. For financial reporting purposes, rent expense is recorded on a straight-line basis over the life of the lease. Accordingly, included in liabilities in the accompanying consolidated balance sheets at
December
25,
2016
and
December
27,
2015
are accruals related to such rent deferrals and the pro rata portion of scheduled rent increases of approximately
$21.7
million and
$20.3
million, respectively, net of the current portion included in other current liabilities
$1.8
million and
$1.9
million, respectively.
 
The Company also leases certain restaurant-related equipment under non-cancellable operating lease agreements with
third
parties, which are included with leased premises in future minimum annual rental commitments.
 
Future minimum annual rental commitments under operating leases as of
December
25,
2016
are as follows (in thousands):
 
 
   
Company 
Total
 
2017
  $
21,806
 
2018
   
20,755
 
2019
   
19,840
 
2020
   
17,982
 
2021
   
15,828
 
Thereafter
   
118,356
 
    $
214,567
 
 
Pursuant to the terms of the Agreement, upon closing of the sale of the Mitchell’s Restaurants, Landry’s assumed the lease obligations of the Mitchell’s Restaurants. However, the Company has guaranteed Landry’s lease obligations aggregating
$35.3
million under
nine
of the leases. The Company did not record a financial accounting liability for the lease guarantees, because the likelihood of Landry’s defaulting on the lease agreements was deemed to be remote. Landry’s also indemnified the Company in the event of a default under any of the leases. The Company did record a
$250
thousand liability for its letter of credit obligation related to
one
of the leases. The above table does not include potential lease obligations for the Mitchell’s Restaurants.
 
Rental expense consists of the following and is included in restaurant operating expenses in the accompanying consolidated statements of income (in thousands):
 
 
 
Fiscal Year
 
 
 
2016
 
 
2015
 
 
2014
 
Minimum rentals
  $
20,300
    $
18,846
    $
17,647
 
Contingent rentals
   
2,659
     
2,877
     
2,558
 
    $
22,959
    $
21,723
    $
20,205