Note 9 – Leases

A substantial portion of the Company’s retail stores and warehouse properties are operated in leased facilities. The Company also leases small ancillary warehouse facilities, the tractor and trailer fleet, and certain other equipment. Most of the property leases contain renewal options of varying terms. Terms of certain leases contain provisions requiring payment of percentage rent based on sales and payment of executory costs such as property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premises. Terms of certain leases of transportation equipment contain provisions requiring payment of percentage rent based upon miles driven. Portions of certain property are subleased to others. Operating leases often contain renewal options. In those locations in which it makes economic sense to continue to operate, management expects that, in the normal course of business, leases that expire will be renewed or replaced by other leases.

Rental expense, net of sublease income, under operating leases consisted of the following:

	January 2, 2016			January 3, 2015			December 28, 2013
(In thousands)	(52 Weeks)			(53 Weeks)			(39 Weeks)
Minimum rentals	$	57,625		$	56,848		$	28,978
Contingent rental payments		267			563			541
Sublease rental income		(5,311	)		(5,027	)		(2,157	)
	$	52,581		$	52,384		$	27,362

The Company’s total future lease commitments under operating and capital leases in effect at January 2, 2016 are as follows:

	Operating Leases
	Used in		Subleased				Capital
(In thousands)	Operations		to Others		Total		Leases
Fiscal Year
2016	$	48,496	$	3,756	$	52,252	$	11,764
2017		41,761		3,205		44,966		11,110
2018		36,459		2,753		39,212		10,799
2019		26,562		2,258		28,820		9,780
2020		20,721		1,792		22,513		6,591
Thereafter		66,291		8,282		74,573		35,551
Total	$	240,290	$	22,046	$	262,336		85,595
	Interest							(26,996	)
	Present value of minimum lease obligations							58,599
	Current maturities							7,471
	Long-term capitalized lease obligations						$	51,128

Assets held under capital leases consisted of the following:

(In thousands)	January 2, 2016		January 3, 2015
Building and improvements	$	72,297	$	72,747
Equipment		5,281		5,695
		77,578		78,442
Less accumulated amortization and depreciation		31,372		29,842
Net assets under capitalized leases	$	46,206	$	48,600

Amortization expense for property under capital leases was $3.6 million, $4.4 million and $2.8 million in fiscal years ended January 2, 2016 and January 3, 2015 and for the 39-week period ended December 28, 2013, respectively.

Certain retail store facilities, either owned or obtained through leasing arrangements, are leased to others. A majority of the leases provide for minimum and contingent rentals based upon stipulated sales volumes and contain renewal options. Certain of the leases contain escalation clauses.

Owned assets, included in property and equipment, which are leased to others are as follows:

(In thousands)	January 2, 2016		January 3, 2015
Land and improvements	$	3,508	$	3,327
Buildings		10,640		10,786
Long-term debt and capital lease obligations		14,148		14,113
Less accumulated amortization and depreciation		5,890		5,187
Net property	$	8,258	$	8,926

Future minimum rentals to be received under lease obligations in effect at January 2, 2016 are as follows:

	Owned		Leased
(in thousands)	Property		Property		Total
Fiscal Year
2016	$	3,535	$	4,535	$	8,070
2017		2,535		3,976		6,511
2018		1,421		3,347		4,768
2019		1,175		2,723		3,898
2020		824		2,131		2,955
Thereafter		1,513		9,093		10,606
Total	$	11,003	$	25,805	$	36,808