What is the present value of lease liabilities for Aunt Millies Bakeries as of September 30, 2023?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
st on finance lease liabilities is reflected on the consolidated statements of operations in interest expense.
The following table represents the weighted-average remaining lease term and discount rate as of September 30, 2023:
| Weighted average remaining lease term (years) | 9.72 |
|---|---|
| Weighted average discount rate | 4.26% |
Future undiscounted lease payments for the Corporation's operating and financing lease liabilities are as follows as of September 30, 2023:
| 2024 2025 2026 2027 | $ | 5,319,866 4,082,728 3,409,099 2,547,418 | |---------------------------------------------------------------------|----|--------------------------------------------------| | 2028 | | 2,233,131 | | Thereafter | | 10.068.537 | | Total future lease payments Less: imputed interest | - | 27,660,780 (7,482,634) | | Present value of lease liabilities Less: Lease liabilities, current | | 20,178,146 (4,481,275) | | Lease liabilities, non-current | $ | 15,696,871 | Many of the operating and financing leases included in the table above are payable to related parties. As of September 30, 2023, the ROU asset and operating lease liabilities from related party leases is $945,590 and $930,679, respectively. The minimum annual lease payments remaining under leases due to related parties with terms of more than one year are as follows:
| 2024 | $ 1,546,370 | |------------|------------------| | 2025 | 1,517,537 | | 2026 | 1,299,627 | | 2027 | 945,028 | | 2028 | 818,346 | | Thereafter | 8,989,621 $ 15,116,528 | Lease expense under the above related party lease agreements aggregated $1,462,661 and $1,073,00 for the years ended September 30, 2023 and 2022, respectively.
NOTE 7 - RETIREMENT PLANS
During 2015, the Company negotiated an exit from one of its multiemployer defined benefit pension plans resulting in a pension withdrawal obligation expense of $6,285,098. The amount recorded represents the present value of the established payments, at 6.5% interest. The payment plan requires monthly payments of $46,860 per month, principal and interest, for 240 months, or 20 years, starting November 1, 2015 with a final payment due on October 1, 2035.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries's 2025 Franchise Disclosure Document, the present value of their total lease liabilities as of September 30, 2023, was $20,178,146. This figure is calculated by subtracting imputed interest of $7,482,634 from the total future lease payments of $27,660,780. The current portion of these lease liabilities, amounting to $4,481,275, is then deducted to arrive at the non-current lease liabilities of $15,696,871.
Additionally, the FDD provides a breakdown of lease liabilities between related parties and third parties. The present value of lease liabilities to related parties is $9,039,515, while the present value of lease liabilities to third parties is $10,430,263. The current portions of these liabilities are $1,417,438 and $3,274,251, respectively, resulting in non-current lease liabilities of $7,622,077 to related parties and $7,156,012 to third parties.
For a prospective Aunt Millies Bakeries franchisee, understanding these lease obligations is crucial. It provides insight into the company's financial commitments and how they manage lease agreements, especially with related parties. This information can help franchisees assess the financial stability of Aunt Millies Bakeries and the potential impact of lease-related expenses on the company's profitability. It is important to note that many of the operating and financing leases are payable to related parties. As of September 30, 2023, the ROU asset and operating lease liabilities from related party leases is $945,590 and $930,679, respectively.