Note 10 – 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. Certain properties or portions thereof 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:

	December 31,			January 2,			January 3,
	2016			2016			2015
(In thousands)	(52 Weeks)			(52 Weeks)			(53 Weeks)
Minimum rentals	$	57,478		$	57,625		$	56,848
Contingent rental payments		314			267			563
Sublease rental income		(4,830	)		(5,311	)		(5,027	)
Total	$	52,962		$	52,581		$	52,384

The Company’s total future lease commitments under operating and capital leases in effect at December 31, 2016 are as follows:

	Operating Leases
	Used in		Subleased				Capital
(In thousands)	Operations		to Others		Total		Leases
Fiscal Year
2017	$	49,236	$	1,836	$	51,072	$	9,261
2018		43,231		1,822		45,053		9,048
2019		32,681		1,362		34,043		8,643
2020		25,723		1,087		26,810		6,449
2021		18,258		694		18,952		4,489
Thereafter		76,745		972		77,717		32,961
Total	$	245,874	$	7,773	$	253,647		70,851
	Interest							(22,596	)
	Present value of minimum lease obligations							48,255
	Current maturities							5,867
	Long-term capitalized lease obligations						$	42,388

Assets held under capital leases consisted of the following:

	December 31,		January 2,
(In thousands)	2016		2016
Building and improvements	$	61,831	$	72,297
Equipment		3,403		5,281
Assets under capitalized leases		65,234		77,578
Less accumulated amortization and depreciation		25,163		31,372
Net assets under capitalized leases	$	40,071	$	46,206

Amortization expense for property under capital leases was $5.2 million, $3.6 million and $4.4 million in fiscal years ended December 31, 2016, January 2, 2016 and January 3, 2015, 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:

	December 31,		January 2,
(In thousands)	2016		2016
Land and improvements	$	3,860	$	3,508
Buildings		13,948		10,640
Long-term debt and capital lease obligations		17,808		14,148
Less accumulated amortization and depreciation		7,625		5,890
Net property	$	10,183	$	8,258

Future minimum rentals to be received under lease obligations in effect at December 31, 2016 are as follows:

	Fiscal Year
(In thousands)	2017		2018		2019		2020		2021		Thereafter		Total
Owned property	$	3,158	$	2,119	$	1,326	$	963	$	694	$	839	$	9,099
Leased property		4,372		3,384		2,122		1,571		854		1,118		13,421
Total	$	7,530	$	5,503	$	3,448	$	2,534	$	1,548	$	1,957	$	22,520