Commitments and Contingencies

12 Months Ended

Dec. 25, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company leases certain restaurant equipment and buildings under operating leases. The majority of the Company's leases contain renewal options for one to five years. The remaining leases may be renewed upon negotiation, however the table below does not include amounts related to unexercised lease renewal option periods. Future minimum lease payments, including non-operating assets, at December 25, 2012 consisted of the following (in thousands):

Fiscal year
2013	47,656
2014	43,450
2015	37,786
2016	30,916
2017	21,822
Thereafter	61,725
Total minimum lease commitments(1)	243,355

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⁽¹⁾ Minimum lease payments have been reduced by aggregate minimum non-cancelable sublease rentals of $0.6 million.

The Company's rent expense, including contingent rent based on a percentage of sales when applicable, is comprised of the following (in thousands):

	Fiscal years ended
	December 25, 2012		December 27,  2011		December 28,  2010
Minimum rents	$	51,360	$	49,966	$	49,919
Contingent rents	1,285		1,274		1,344
	$	52,645	$	51,240	$	51,263

Under the Company's franchise agreements, the Company is required to rebuild a substantial number of restaurants, depending upon certain criteria as defined in the franchise agreements. Certain of the assets to be rebuilt are currently paying royalties of 6.5% of sales, as defined in the franchise agreements, and will qualify for a reduction in royalty rate of up to 2.5% of sales depending upon the timing and nature of the asset action. The Company expects to incur capital expenditures of approximately $13.4 million over the remaining three years to meet this requirement. As part of the location franchise agreements entered into as a result of the various acquisitions of Pizza Hut units from PHI, the Company is required to complete certain major asset actions extending through February 2022 and expects to incur approximately $8.8 million over the next 10 years to meet these requirements.

Concurrently with the closing of the Acquisition, certain members of management purchased common stock of NPC Holdings for $4.1 million. Under the terms of the Stockholders Agreement of NPC Holdings, the common stock is required to be repurchased by NPC Holdings upon the termination of the employment of the employee. However, the amount of this liability is determined based upon the circumstances of the termination of employment. The Company does not have a contractual obligation to fund the purchase of the mandatorily redeemable stock; however, the Company could be required to provide a distribution to NPC Holdings to fund the repurchase in the event of an employee’s termination of employment from the Company. The value of this contingent obligation is subject to a formula defined in the Stockholders Agreement. Based on the financial results for fiscal year 2012, the common stock held by management has a combined value of approximately $4.1 million to $7.7 million.

Upon completion of the 2012 Transaction, the Company entered into an advisory agreement with Olympus. Under the agreement Olympus or its affiliates will continue to provide financial, investment banking, management advisory and other services on the Company’s behalf for an annual fee of $1.0 million, paid in quarterly installments in arrears on the last day of each calendar quarter. See Note 14 - Transactions with Sponsors.