NOTE 6. LEASES

We have entered into capital leases for certain property and transportation equipment. At February 2, 2013, the total capital lease obligation was $2.8 million, of which $0.7 million was classified as a short-term liability and included in capital lease obligations and $2.1 million was classified as a long-term liability as obligations under capital leases in our consolidated balance sheet. At January 28, 2012, the total capital lease obligation was $2.2 million, of which $0.2 million was classified as a short-term liability and included in capital lease obligations and $2.0 million was classified as a long-term liability as obligations under capital leases in our consolidated balance sheet. The cost basis of total assets under capital leases at February 2, 2013 and January 28, 2012 was $3.2 million and $2.4 million, respectively, with accumulated amortization at February 2, 2013 and January 28, 2012 of $0.5 million and $0.3 million, respectively. Amortization expense related to assets under capital leases was $0.2 million, $0.3 million and $0.2 million in Fiscal 2013, Fiscal 2012 and Fiscal 2011, respectively.

We lease the majority of our retail sporting goods stores under non-cancelable operating leases. The leases typically provide for terms of five to ten years with options to extend at our discretion. Many of our leases contain scheduled increases in annual rent payments and the majority of our leases also require us to pay maintenance, insurance and real estate taxes. Additionally, many of the lease agreements contain tenant improvement allowances, rent holidays and/or rent escalation clauses (contingent rentals) based on net sales for the location. For purposes of recognizing incentives and minimum rental expenses on a straight-line basis over the terms of the leases, we use the date of initial possession to begin amortization, which is generally when we enter the space and begin to make improvements in preparation of our intended use.

Most of our retail store leases contain provisions that allow for early termination of the lease if certain pre-determined annual sales levels are not met. Generally, these provisions allow the lease to be terminated between the third and fifth year of the lease. Should the lease be terminated under these provisions, in some cases, the unamortized portion of any landlord allowances related to that property would be payable to the landlord.

We also lease certain office equipment and transportation equipment under non-cancelable operating leases having initial terms of more than one year.

In February 1996, we entered into a sale-leaseback transaction to finance our distribution center and office facilities. In December 1999, the related operating lease was amended to include the Fiscal 2000 expansion of these facilities. The amended lease rate is $0.9 million per year and can increase annually with the Consumer Price Index. This lease will expire in December 2014. Future minimum lease payments under this non-cancelable lease aggregate approximately $1.9 million. The transaction is also subject to quarterly financial covenants based on certain ratios.

During Fiscal 2013, we increased our lease commitments by a net of 41 retail stores, each having initial lease termination dates between April 2017 and May 2023 as well as various office and transportation equipment. At February 2, 2013, the future minimum lease payments under capital leases and the present value of such payments, and the future minimum lease payments under our operating leases, excluding maintenance, insurance and real estate taxes, including the net 41 operating leases added during Fiscal 2013, were as follows (in thousands):

	Capital		Operating		Total
Fiscal 2014	$	874	$	47,549	$	48,423
Fiscal 2015		372		38,902		39,274
Fiscal 2016		375		28,318		28,693
Fiscal 2017		385		20,703		21,088
Fiscal 2018		385		14,160		14,545
Thereafter		1,206		23,272		24,478
Total minimum lease payments		3,597		172,904		176,501
Less amount representing interest		745		-		745
Present value of total minimum lease payments	$	2,852	$	172,904	$	175,756

Rental expense for all operating leases consisted of the following (in thousands):

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Minimum rentals	$	40,075	$	37,971	$	36,294
Contingent rentals		6,331		5,767		5,220
	$	46,406	$	43,738	$	41,514