7. OPERATING LEASES

Lease Expense

In the normal course of business, we lease office space and warehouse and distribution facilities under non-cancelable operating lease agreements. We rent office space, primarily for international and domestic regional sales administration offices, in commercial office complexes that are conducive to sales and administrative operations. We also rent warehousing and distribution facilities that are designed to provide secure storage and efficient distribution of our training products and accessories. These operating lease agreements generally contain renewal options that may be exercised at our discretion after the completion of the base rental term. In addition, many of the rental agreements provide for regular increases to the base rental rate at specified intervals, which usually occur on an annual basis. At August 31, 2012, we had operating leases that have remaining terms ranging from approximately one year to approximately nine years. Following the sale of our consumer solutions business unit (CSBU) assets, FC Organizational Products is contractually obligated to pay to us a portion of our minimum rental payments on certain warehouse and distribution facilities that they are using, although we are still responsible for the gross required minimum lease payments. The following table summarizes our future minimum lease payments under operating lease agreements and the lease amounts receivable from FC Organizational Products at August 31, 2012 (in thousands):



		Required		Receivable		Net Required
		Minimum		from FC		Minimum
YEAR ENDING		Lease		Organizational		Lease
AUGUST 31,		Payments		Products		Payments
2013	$	1,872	$	(529)	$	1,343
2014		1,549		(584)		965
2015		1,405		(632)		773
2016		1,136		(535)		601
2017		225		-		225
Thereafter		688		-		688
	$	6,875	$	(2,280)	$	4,595

We recognize lease expense on a straight-line basis over the life of the lease agreement. Contingent rent expense is recognized as it is incurred and was insignificant for the periods presented. Total rent expense recorded in selling, general, and administrative expense from operating lease agreements was $2.2 million, $2.7 million, and $3.0 million for the fiscal years ended August 31, 2012, 2011, and 2010.

Lease Income

We have subleased a significant portion of our corporate headquarters campus located in Salt Lake City, Utah to multiple, unrelated tenants as well as to FC Organizational Products. We recognize sublease income on a straight-line basis over the life of the sublease agreement. The cost basis of the office space available for lease was $33.9 million, which had a carrying value of $12.8 million at August 31, 2012. The following future minimum lease payments due to us from our sublease agreements at August 31, 2012 include lease income of approximately $0.8 million per year from FC Organizational Products. All lease income disclosed after fiscal 2017 is from FC Organizational Products (in thousands):



YEAR ENDING
AUGUST 31,
2013	$	3,999
2014		2,443
2015		2,288
2016		1,815
2017		969
Thereafter		6,479
	$	17,993

Sublease revenue totaled $3.2 million, $2.4 million, and $3.2 million during the fiscal years ended August 31, 2012, 2011, and 2010.