Leases

12 Months Ended

Dec. 29, 2018

Note 10 – Leases

A portion of the Company’s retail stores and warehouses are operated in leased facilities. The Company also leases small ancillary warehouse facilities, the majority of the tractors and trailers within its 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:

(In thousands)	2018			2017			2016
Minimum rentals	$	61,774		$	55,159		$	57,478
Contingent rent (reductions) increases		(219	)		(237	)		314
Sublease rental income		(3,554	)		(3,407	)		(4,830	)
Total	$	58,001		$	51,515		$	52,962

The Company’s total future lease commitments under operating and capital leases in effect at December 29, 2018 are as follows:

	Operating Leases
	Used in		Subleased				Capital
(In thousands)	Operations		to Others		Total		Leases
2019	$	54,098	$	1,039	$	55,137	$	9,091
2020		47,212		817		48,029		7,049
2021		39,887		694		40,581		5,377
2022		32,299		468		32,767		4,685
2023		25,419		357		25,776		3,912
Thereafter		75,626		147		75,773		25,152
Total	$	274,541	$	3,522	$	278,063		55,266
	Interest							(15,708	)
	Present value of minimum lease obligations							39,558
	Current maturities							6,840
	Long-term capital lease obligations						$	32,718

Assets held under capital leases consisted of the following:

	December 29,		December 30,
(In thousands)	2018		2017
Building and improvements	$	57,326	$	60,398
Equipment		6,889		3,727
Assets under capital leases		64,215		64,125
Less accumulated amortization and depreciation		30,774		29,518
Net assets under capital leases	$	33,441	$	34,607

Amortization expense for property under capital leases was $4.3 million, $4.4 million and $5.2 million in 2018, 2017 and 2016, 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 29,		December 30,
(In thousands)	2018		2017
Land and improvements	$	7,389	$	6,515
Buildings		28,932		24,236
Owned assets leased to others		36,321		30,751
Less accumulated amortization and depreciation		10,044		8,123
Net owned assets leased to others	$	26,277	$	22,628

Future minimum rentals to be received under lease obligations in effect at December 29, 2018 are as follows:

(In thousands)	2019		2020		2021		2022		2023		Thereafter		Total
Owned property	$	4,876	$	4,540	$	4,243	$	3,773	$	2,754	$	20,002	$	40,188
Leased property		2,993		2,594		1,888		1,597		1,274		3,316		13,662
Total	$	7,869	$	7,134	$	6,131	$	5,370	$	4,028	$	23,318	$	53,850