6. Leases

Description of Leasing Arrangements

The Company's leasing operations consist principally of leasing certain land, buildings and equipment (including signs) and subleasing certain buildings to franchise operators. The land and building portions of these leases are classified as operating leases with lease terms expiring through September 2030. The equipment portions of these leases are classified principally as direct financing leases and expire principally over the next nine years. These leases include provisions for contingent rentals that may be received on the basis of a percentage of sales in excess of stipulated amounts. Income is not recognized on contingent rentals until sales exceed the stipulated amounts. Some leases contain escalation clauses over the lives of the leases. Most of the leases contain one to four renewal options at the end of the initial term for periods of five years.

The Company has two significant master lease agreements with franchisees as a result of previously refranchised drive-ins. These leases consist of leasing land, buildings and signs for a period of 15 years and are classified as operating leases. There are four renewal options at the end of the primary term for periods of five years for property that is owned by the Company. For property owned by third parties, the lease term runs concurrent with the term of the third-party lease arrangements. These leases include provisions for contingent rentals that may be received on the basis of a percentage of sales in excess of stipulated amounts. Both leases contain escalation clauses based on sales over the life of the lease.

Certain Company Drive-Ins lease land and buildings from third parties. These leases, with lease terms expiring through August 2030, include provisions for contingent rents that may be paid on the basis of a percentage of sales in excess of stipulated amounts. For the majority of leases, the land portions are classified as operating leases, and the building portions are classified as capital leases.

Receivables as a Lessor

Components of net investment in direct financing leases are as follows at August 31:


	2012			2011
Minimum lease payments receivable	$	1,041		$	1,530
Less unearned income		(228	)		(374	)
Net investment in direct financing leases		813			1,156
Less amount due within one year		(233	)		(294	)
Amount due after one year	$	580		$	862

Initial direct costs incurred in the negotiations and consummations of direct financing lease transactions have not been material. Accordingly, no portion of unearned income has been recognized to offset those costs.

Future minimum rental payments receivable as of August 31, 2012 are as follows:


	Operating		Direct Financing
Years ending August 31:
2013	$	12,488	$	322
2014		12,273		238
2015		12,472		185
2016		12,361		135
2017		12,374		94
Thereafter		90,900		67
	$	152,868		1,041
Less unearned income				(228	)
			$	813

Commitments as a Lessee

Maturities under capital leases and future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of August 31, 2012 are as follows:


	Operating		Capital
Years ending August 31:
2013	$	11,877	$	5,845
2014		11,783		6,172
2015		11,668		5,312
2016		11,123		4,876
2017		10,098		4,471
Thereafter		104,337		14,620
Total minimum lease payments	$	160,886		41,296
Less amount representing interest averaging 6.6%				(9,620	)
Present value of net minimum lease payments				31,676
Less amount due within one year				(4,299	)
Amount due after one year			$	27,377

Total rent expense for all operating leases and capital leases consist of the following for the years ended August 31:


	2012			2011			2010
Operating leases:
Minimum rentals	$	14,555		$	14,185		$	14,330
Contingent rentals		103			138			176
Sublease rentals		(2,851	)		(2,847	)		(2,993	)
Capital leases:
Contingent rentals		799			745			740
	$	12,606		$	12,221		$	12,253

The aggregate future minimum rentals receivable under noncancelable operating and capital subleases as of August 31, 2012, was $35.3 million and $2.1 million, respectively.