Commitments, License Rights and Contingencies

12 Months Ended

May 30, 2013

Contingencies [Abstract]

Commitments License Rights and Contingencies

9. Commitments, License Rights and Contingencies

Lease Commitments – The Company leases real estate under various noncancellable operating leases with an initial term greater than one year that contain multiple renewal options, exercisable at the Company’s option. The Company recognizes rent expense on a straight-line basis over the expected lease term, including cancelable option periods where failure to exercise such options would result in an economic penalty. Percentage rentals are based on the revenues at the specific rented property. Rent expense charged to operations under these leases was as follows:

	Year Ended
	May 30, 2013		May 31, 2012		May 26, 2011
	(in thousands)
Fixed minimum rentals	$	8,024	$	7,843	$	7,955
Amortization of favorable lease right		334		334		334
Percentage rentals		60		70		39
	$	8,418	$	8,247	$	8,328

Aggregate minimum rental commitments under long-term operating leases, assuming the exercise of certain lease options, are as follows at May 30, 2013:

Fiscal Year	(in thousands)
2014	$	7,181
2015		7,205
2016		7,123
2017		7,044
2018		7,203
Thereafter		92,216
	$	127,972

Commitments – The Company has commitments for the completion of construction at various properties totaling approximately $19,080,000 at May 30, 2013.

License Rights – The Company has license rights to operate three hotels using the Hilton trademark, one hotel using the Four Points by Sheraton trademark, one hotel using the InterContinental trademark and one hotel using the Marriott trademark. Under the terms of the licenses, the Company is obligated to pay fees based on defined gross sales.

Contingencies – The Company guarantees the debt of a joint venture totaling $1,172,000 at May 30, 2013. The debt of the joint venture is collateralized by the real estate, building and improvements and all equipment. The Company has reserved for a possible payment of a portion of the guarantee within the next fiscal year.

On July 7, 2005, the Company amended its office lease in order to exit leased office space for the Company’s former limited-service lodging division. To induce the landlord to amend the lease, the Company guaranteed the lease obligations of the new tenant of the relinquished space through November 2013. The maximum amount of future payments the Company could be required to pay if the new tenant defaults on its lease obligations was approximately $238,000 as of May 30, 2013. The Company does not anticipate the guarantee to be payable within the next fiscal year.