Note F - Leases

At January 1, 2012, the Company was lessee under both ground leases (the Company leases the land and builds its own buildings) and improved leases (lessor owns the land and buildings) for restaurant locations. These leases are generally operating leases.

Terms for these leases are generally for 15 to 20 years and, in many cases, the leases provide for rent escalations and for one or more five-year renewal options. The Company is generally obligated for the cost of property taxes, insurance and maintenance. Certain real property leases provide for contingent rentals based upon a percentage of sales. In addition, the Company is lessee under other non-cancelable operating leases, principally for office space.

As a result of asset impairment charges taken in 2009, accumulated amortization of buildings under capital leases, which totaled $173,000 at December 28, 2008, was eliminated as of January 3, 2010. Amortization of leased assets has historically been included in depreciation and amortization expense.

Total rental expense amounts to:


				Years Ended
		January 1		January 2		January 3
		2012		2011		2010
Minimum rentals under operating leases	$	4,769,000	$	4,773,000	$	4,843,000
Contingent rentals		133,000		128,000		82,000
	$	4,902,000	$	4,901,000	$	4,925,000

At January 1, 2012, future minimum lease payments under capital leases and non-cancelable operating leases (excluding renewal options) with initial terms of one year or more are as follows:


			Capital			Operating
			Leases			Leases
2012		$	56,000		$	4,353,000
2013			56,000			4,436,000
2014			56,000			4,448,000
2015			4,000			3,769,000
2016			0			3,457,000
Thereafter			0			11,846,000
	Total minimum payments		172,000		$	32,309,000
	Less imputed interest		(25,000	)
	Present value of minimum rental payments		147,000
	Less current maturities at January 1, 2012		(43,000	)
	Long-term obligations at January 1, 2012	$	104,000