Note 18. Commitments

Operating Leases

We lease office space, restaurant and production facilities, warehouse and storage space, land and equipment under operating leases that expire at various dates through the year ending December 31, 2047. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices. Certain leases require us to pay for insurance, taxes and maintenance applicable to the leased property. Under the terms of the land lease for our New Hampshire Brewery, we hold a first right of refusal to purchase the property should the lessor decide to sell the property.

Minimum aggregate future lease payments under non-cancelable operating leases as of December 31, 2011 are as follows (in thousands):

2012	$	1,341
2013		1,216
2014		925
2015		907
2016		793
Thereafter		12,515
	$	17,697

Rent expense under all operating leases, including short-term rentals as well as cancelable and noncancelable operating leases, totaled $2.8 million, $2.4 million and $2.9 million for the years ended December 31, 2011, 2010 and 2009, respectively.

We sub-lease corporate office space to an unrelated party pursuant to a 5-year lease that began in February 2011. The lessee also leased this space pursuant to a previous lease agreement in 2010 and 2009. The lessee may renew the lease for two additional five-year periods. We recognized rental income of $242,000, $193,000 and $177,000 for the years ended December 31, 2011, 2010 and 2009, respectively, which was recorded as an offset to rent expense in our Consolidated Statements of Income. Future minimum lease rentals pursuant to this agreement as of December 31, 2011 are as follows (in thousands):


2012	$	253
2013		261
2014		269
2015		277
2016		23
	$	1,083

We lease our headquarters office space, restaurant and storage facilities located in Portland, land and certain equipment from two limited liability companies, both of whose members include our current Board Chair and a nonexecutive officer. Lease payments to these lessors totaled $122,000, $124,000 and $118,000 for the years ended December 31, 2011, 2010 and 2009, respectively. The lease for the headquarters office space and restaurant facility expires in 2034, with an extension at our option for two 10-year periods, while the lease for the other facilities, land and equipment expires in 2017 with an extension at our option for two five-year periods. We hold a right to purchase the headquarters office space and restaurant facility at the greater of $2.0 million or the fair market value of the property as determined by a contractually established appraisal method. The right to purchase is not valid in the final year of the lease term or in each of the final years of the renewal terms, as applicable. All lease terms are considered to be arm's-length transactions.

We hold lease and sublease obligations for certain office space and the land underlying the brewery and pub location in Kona, Hawaii, with a company whose owners include a shareholder who owns more than 5% of our common stock and a nonexecutive officer. The sublease contracts expire on various dates through 2020, with an extension at our option for two five-year periods. Lease payments to this lessor totaled $360,000 and $41,000 for the years ended December 31, 2011 and 2010. All lease terms are considered to be arm's-length transactions.

Purchase and Sponsorship Commitments

We periodically enter into commitments to purchase certain raw materials in the normal course of business. Furthermore, we have entered into purchase commitments and commodity contracts to ensure we have the necessary supply of malt and hops to meet future production requirements. Certain of the malt and hop commitments are for crop years through 2014. We believe that malt and hop commitments in excess of future requirements, if any, will not have a material impact on our financial condition or results of operations. We may take delivery of the commodities in excess of our requirements or make payments against the purchase commitments earlier than contractually obligated, which means our cash outlays in any particular year may exceed or be less than the commitment amount disclosed.

In certain cases, we have executed agreements with selected vendors to source our requirements for specific malt varieties for the years ending December 31, 2012 and 2013; however, either the quantity to be delivered or the full price for the commodity has not been established at the present time. To the extent the commitment is not measurable or has not been fixed, that portion of the commitment has been excluded from the table below.

We have entered into multi-year sponsorship and promotional commitments with certain professional sports teams and entertainment companies. Generally, in exchange for our sponsorship consideration, we post signage and provide other promotional materials at the site or the event. In certain instances, we are granted an exclusive right to provide the craft beer products at the site or event. The terms of these sponsorship commitments expire at various dates through June 30, 2015.

Aggregate payments under purchase and sponsorship commitments as of December 31, 2011 are as follows:

	Purchase Obligations		Sponsorship Obligations		Total
2012	$	13,354	$	1,574	$	14,928
2013		2,119		847		2,966
2014		1,049		452		1,501
2015		612		80		692
2016		-		-		-
Thereafter		-		-		-
	$	17,134	$	2,953	$	20,087