one and two of the five year lease. The company will recognize the deferred gain as income if it does not  exercise its option to purchase the six vessels at the end of the operating lease term. If the company  exercises its option to purchase these vessels, the deferred gain will reduce the vessel’s stated cost after  exercising the purchase option.  In March 2006, the company entered into agreements to sell five of its vessels that were under construction  at the time to Banc of America Leasing & Capital LLC (BOAL&C), an unrelated third party, for $76.5 million  and simultaneously enter into bareboat charter agreements with BOAL&C upon the vessels’ delivery to the  market. Construction on these five vessels was completed at various times between March 2006 and  March 2008, at which time the company sold the respective vessels and simultaneously entered into  bareboat charter agreements.  The company accounted for all five transactions as sale/leaseback transactions with operating lease  treatment. Accordingly, the company did not record the assets on its books and the company is expensing  periodic lease payments. The bareboat charter agreements on the first two vessels expire in calendar year 2014 unless extended.  The company has the option to extend the respective bareboat charter agreements three times, each for a  period of 12 months, which would provide the company the opportunity to extend the operating leases  through calendar year 2017. The bareboat charter agreements on the third and fourth vessels expire in  2015 and the company has the option to extend the bareboat charter agreements three times, each for a  period of 12 months, which would provide the company the opportunity to extend the operating leases  through calendar year 2018. The bareboat charter agreements on the fifth vessel expires in 2016 and the  company has the option to extend the bareboat charter agreements three times, each for a period of  12 months, which would provide the company the opportunity to extend the operating leases through  calendar year 2019. At the end of the basic term (or extended option periods), the company has an option to  purchase each of the vessels at its then fair market value or to redeliver the vessel to its owner. The  company may also purchase each of the vessels at their fixed amortized values, as outlined in the bareboat  charter agreements, at the end of the fifth year, and again at the end of the seventh year, from the  commencement dates of the respective charter agreements.  As of March 31, 2010, the future minimum lease payments for the vessels under the operating lease terms  are as follows:  The preparation of our consolidated financial statements in accordance with accounting principles generally  accepted in the United States of America requires management to make estimates and assumptions that  affect the recorded amounts of assets and liabilities and disclosure of any contingent assets and liabilities at  the date of the financial statements and the revenues recognized and expenses incurred during the  reporting period. The company evaluates the reasonableness of these estimates and assumptions  Fiscal 2006 Sale/Leaseback  Future Minimum Lease Payments  Application of Critical Accounting Policies and Estimates The company expensed approximately $15.1 million, $7.0 million, and $4.7 million on these bareboat  charter arrangements during fiscal 2010, 2009 and 2008, respectively. For more disclosure on the  company’s sale-leaseback arrangement refer to Note 9 of Notes to Consolidated Financial Statements  included in Item 8 of this report. Fiscal 2010  Fiscal 2006  Fiscal year ending (In thousands) Sale/Leaseback  Sale/Leaseback  Total  2011 $ 10,702 6,924 17,626 2012 10,702 6,924 17,626 2013 10,703 6,924 17,627 2014 10,703 6,906 17,609 2015  2,836 7,547 10,383 Thereafter --- --- --- Total future lease payments  $  45,646  35,225  80,871  -56- 