Commitments and Contingencies

Commitments

Leases

The Company leases property and equipment under non-cancelable operating leases. Certain retail store lease agreements provide for contingent rental payments if the store’s net sales exceed stated levels (percentage rents) and/or contain escalation clauses, which provide for increases in base rental for increases in future operating costs. Many of the Company’s leases provide for one or more renewal options for periods of five years. The Company’s operating lease agreements, including assumed extensions, which are generally those that take the lease to a ten-year term, expire through fiscal 2024.

The Company’s minimum rental commitments under operating lease agreements, including assumed extensions, as of January 31, 2015, are as follows (in thousands):



Fiscal Year	Retail stores		Corporate office and distribution centers		Total

2015	$	57,985	$	6,751	$	64,736
2016	58,600		6,744		65,344
2017	57,532		6,603		64,135
2018	55,856		7,128		62,984
2019	54,664		7,748		62,412
Thereafter	182,805		37,195		220,000
	$	467,442	$	72,169	$	539,611

Rent expense, including base and contingent rent under operating leases, was $53.6 million, $41.8 million and $32.8 million in fiscal 2014, fiscal 2013 and fiscal 2012, respectively. Contingent rents were $0.5 million, $0.5 million and $0.5 million in fiscal 2014, fiscal 2013 and fiscal 2012, respectively.

From February 1, 2015 to March 26, 2015, the Company committed to 10 new store leases with terms of 10 years that have future minimum lease payments of approximately $24.2 million.

Other contractual commitments

The Company has employment agreements with certain key employees that provide for, among other things, salary, bonus, severance, and change-in-control provisions. The severance and change of control provisions under these agreements provide for additional payments upon employee separation of up to approximately $5.7 million.

As of January 31, 2015, the Company has other purchase commitments of approximately $2.9 million consisting of purchase agreements for materials that will be used in the construction of new stores.

Contingencies

Legal Matters

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, the outcome of such actions will not have a material adverse effect on the Company’s financial condition or results of operations. On January 9, 2015, a putative class action was filed against Five Below, Inc. and certain of the Company's current and former senior officers in the United States District Court for the Eastern District of Pennsylvania, purportedly on behalf of a class of the Company's investors who purchased our publicly traded securities between June 5, 2014 and December 4, 2014. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder in connection with various public statements made by the Company. In addition, on February 25, 2015, a shareholder derivative complaint was filed on behalf of Five Below, as nominal defendant, and asserting claims against certain of the Company's directors in the United States District Court for the District of Rhode Island. The complaint in this action alleges various violations of state law, including breach of fiduciary duties, arising from the alleged federal securities violations asserted in the securities class action. The Company intends to vigorously defend against these actions, which the Company believes to be without merit. The potential impact of these actions, which seek unspecified damages, attorneys’ fees and expenses, is uncertain.