NOTE 7.

LEASES

We have entered into capital leases for certain property and transportation equipment. At February 2, 2019, total capital lease obligations were $3.0 million, of which $1.0 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 and included in capital lease obligations in our consolidated balance sheet. At February 3, 2018, total capital lease obligations were $3.2 million, of which $0.7 million was classified as a short-term liability and included in capital lease obligations and $2.5 million was classified as a long-term liability and included in capital lease obligations in our consolidated balance sheet. The cost basis of total assets under capital leases at February 2, 2019 and February 3, 2018 was $5.9 million and $5.4 million, respectively, with accumulated amortization at February 2, 2019 and February 3, 2018 of $3.3 million and $2.7 million, respectively. Amortization expense related to assets under capital leases was $0.7 million, $0.6 million and $0.6 million in Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively.

We lease the majority of our stores under 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 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 operating leases having initial terms of more than one year.

During Fiscal 2019, we acquired 136 stores, opened 32 new stores and increased our lease commitments by a net of 84 stores and one administrative office lease. Of the new lease commitments, the initial lease termination dates were between May 2023 and March 2029. At February 2, 2019, 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, were as follows (in thousands):

	Capital		Operating		Total
Fiscal 2020	$	1,259	$	68,002	$	69,261
Fiscal 2021		951		58,666		59,617
Fiscal 2022		451		46,683		47,134
Fiscal 2023		408		34,011		34,419
Fiscal 2024		306		22,426		22,732
Thereafter		217		40,181		40,398
Total minimum lease payments		3,592		269,969		273,561
Less amount representing interest		581		-		581
	$	3,011	$	269,969	$	272,980

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

	Fiscal Year Ended
	February 2, 2019 (52 weeks)		February 3, 2018 (53 weeks)		January 28, 2017 (52 weeks)
Minimum rentals	$	55,755	$	54,337	$	54,910
Contingent rentals		4,397		4,931		4,744
	$	60,152	$	59,268	$	59,654