12. Leases

The Company leases most of its retail stores and certain distribution facilities under noncancellable operating and capital leases, most of which have initial lease terms ranging from 5 to 22 years. The Company also leases certain of its equipment and other assets under noncancellable operating leases with initial terms ranging from 3 to 10 years. In addition to minimum rental payments, certain store leases require additional payments based on sales volume, as well as reimbursements for taxes, maintenance and insurance. Most leases contain renewal options, certain of which involve rent increases. Total rental expense, net of sublease income of $8,369, $8,536, and $8,866, was $952,777, $951,239, and $976,892 in fiscal 2014, 2013, and 2012, respectively. These amounts include contingent rentals of $18,679, $21,026 and $22,659 in fiscal 2014, 2013, and 2012, respectively.

During fiscal 2014, the Company sold one owned operating store to an independent third party. Net proceeds from the sale were $3,989. Concurrent with this sale, the Company entered into an agreement to lease the store back from the purchaser over a minimum lease term of 20 years. The Company accounted for this lease as an operating lease. The transaction resulted in a gain of $269 which is included in the gain on sale of assets, net for the fifty-two weeks ended March 1, 2014.

During fiscal 2013, the Company sold two owned operating stores to independent third parties. Net proceeds from the sale were $6,355. Concurrent with these sales, the Company entered into agreements to lease the stores back from the purchasers over a minimum lease term of 12 to 20 years. The Company accounted for these leases as operating leases. The transactions resulted in a gain of $1,818 which is included in the gain on sale of assets, net for the fifty-two weeks ended March 2, 2013.

During fiscal 2012, the Company sold two owned operating stores to independent third parties. Net proceeds from the sale were $6,038. Concurrent with these sales, the Company entered into agreements to lease the stores back from the purchasers over a minimum lease term of 7 to 10 years. The Company accounted for these leases as operating leases. The transactions resulted in a loss of $3,896 which is included in the gain on sale of assets, net for the fifty-three weeks ended March 3, 2012.

The net book values of assets under capital leases and sale-leasebacks accounted for under the financing method at March 1, 2014 and March 2, 2013 are summarized as follows:

	2014			2013

Land	$	5,063		$	6,692
Buildings		135,581			137,206
Leasehold improvements		1,446			1,691
Equipment		34,305			21,316
Accumulated depreciation		(113,536	)		(103,381	)


	$	62,859		$	63,524

Following is a summary of lease finance obligations at March 1, 2014 and March 2, 2013:

	2014			2013

Obligations under financing leases	$	102,671		$	107,308
Sale-leaseback obligations		4,740			7,876
Less current obligation		(32,240	)		(23,334	)


Long-term lease finance obligations	$	75,171		$	91,850

Following are the minimum lease payments for all properties under a lease agreement that will have to be made in each of the years indicated based on non-cancelable leases in effect as of March 1, 2014:

Fiscal year	Lease Financing Obligations			Operating Leases

2015	$	40,030		$	996,495
2016		21,228			953,607
2017		19,330			892,261
2018		13,496			810,267
2019		12,370			713,914
Later years		33,656			3,405,091


Total minimum lease payments		140,110		$	7,771,635




Amount representing interest		(32,699	)


Present value of minimum lease payments	$	107,411