NOTE C — LEASED PROPERTY

Although the Company's policy is to own the property on which it operates restaurants, the Company occupies certain of its restaurants pursuant to lease agreements. As of March 6, 2012, 22 restaurants were in operation on non-owned premises, 21 of which were classified as operating leases. Seven of the operating leases are for Golden Corral operations. Big Boy restaurants are operated under the terms of 14 operating leases and one capital lease.

Since the beginning of fiscal year 2012, one new Big Boy restaurant was opened on non-owned premises pursuant to the terms of an operating lease and one big Boy restaurant was permanently closed due to the expiration of its operating lease. Another operating lease will expire in May 2012, with the underlying Big Boy restaurant expected to be vacated. Most of the remaining operating leases are for 15 or 20 years and contain multiple five year renewal options.

Office space is occupied under an operating lease that expires during fiscal year 2013, with renewal options available through fiscal year 2023. A purchase option is available in 2023 to acquire the office property in fee simple estate.

Rent expense under operating leases:


	40 weeks ended				12 weeks ended
	Mar. 6, 2012		Mar. 8, 2011		Mar 6, 2012		Mar. 8, 2011
	(in thousands)
Minimum rentals	$	1,400	$	1,308	$	418	$	392
Contingent payments		—		—		—		—

	$	1,400	$	1,308	$	418	$	392

The capital lease used in Big Boy operations is for land on which a Big Boy restaurant opened for business in July 2010. Under the terms of the lease, the Company is required to purchase the land in fee simple estate after the 10th year. Delivery and other equipment is held under capitalized leases expiring during various periods extending into fiscal year 2019.

An analysis of the capitalized leased property is shown in the following table. Amortization of capitalized delivery and other equipment is based on the straight-line method over the primary terms of the leases.


	Asset balances at
	Mar. 6, 2012			May 31, 2011
	(in thousands)
Restaurant property (land)	$	825		$	825
Delivery and other equipment		1,730			1,730
Less accumulated amortization		(864	)		(662	)

	$	1,691		$	1,893

Future minimum lease payments under capitalized leases and operating leases are summarized below:


	Capitalized			Operating
Period ending March 6,	leases			leases
	(in thousands)
2013	$	284		$	1,628
2014		245			1,601
2015		245			1,547
2016		245			1,414
2017		245			1,450
2018 to 2033		1,238			13,689

Total		2,502		$	21,329

Amount representing interest		(755	)

Present value of obligations		1,747

Portion due within one-year		(186	)

Long-term obligations	$	1,561