Leases

At January 3, 2016, Wendy’s and its franchisees operated 6,479 Wendy’s restaurants. Of the 632 company-owned Wendy’s restaurants, Wendy’s owned the land and building for 327 restaurants, owned the building and held long-term land leases for 214 restaurants and held leases covering land and building for 91 restaurants. Lease terms are generally initially between 15 and 20 years and, in most cases, provide for rent escalations and renewal options. Certain leases contain contingent rent provisions that require additional rental payments based upon restaurant sales volume in excess of specified amounts. The Company also leases restaurant, office and transportation equipment. Certain leases also provide for payments of other costs such as real estate taxes, insurance and common area maintenance, which have been excluded from rental expense and future minimum rental payments set forth in the tables below.

As of January 3, 2016, Wendy’s also owned 340 and leased 720 properties that were either leased or subleased principally to franchisees. Initial lease terms are generally 20 years and, in most cases, provide for rent escalations and renewal options. Certain leases to franchisees also include contingent rent provisions based on sales volume exceeding specified amounts. The lessee bears the cost of real estate taxes, insurance and common area maintenance, which have been excluded from rental income and future minimum rental receipts set forth in the tables below.

Rental expense for operating leases consists of the following components:



	Year Ended
	2015		2014		2013
Rental expense:
Minimum rentals	$	77,606	$	76,178	$	68,373
Contingent rentals	18,270		19,967		10,421
Total rental expense (a)	$	95,876	$	96,145	$	78,794

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(a)	Amounts exclude sublease income of $61,618, $46,743, and $16,924 recognized during 2015, 2014 and 2013, respectively.

Rental income for operating leases and subleases consists of the following components:



	Year Ended
	2015		2014		2013
Rental income:
Minimum rentals	$	68,241	$	50,249	$	15,451
Contingent rentals	18,731		17,745		11,162
Total rental income	$	86,972	$	67,994	$	26,613

The following table illustrates the Company’s future minimum rental payments and rental receipts for non-cancelable leases and subleases, including rental receipts for direct financing leases as of January 3, 2016. Rental receipts below are presented separately for owned properties and for leased properties based on the classification of the underlying lease.



	Rental Payments					Rental Receipts
Fiscal Year	Capital Leases			Operating Leases		Capital Leases		Operating Leases		Owned Properties
2016	$	11,530		$	72,217	$	17,138	$	50,259	$	32,926
2017	10,755			70,070		17,394		50,108		32,885
2018	12,638			68,544		17,532		49,442		33,058
2019	12,825			67,622		17,590		49,366		34,030
2020	13,339			66,634		18,162		48,820		34,601
Thereafter	197,169			876,367		293,317		662,972		622,435
Total minimum payments	$	258,256		$	1,221,454	$	381,133	$	910,967	$	789,935
Less interest	(149,083		)
Present value of minimum capital lease payments (a)	$	109,173

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(a)	The present value of minimum capital lease payments of $540 and $108,633 are included in “Current portion of long-term debt” and “Long-term debt,” respectively.

Properties owned by the Company and leased to franchisees and other third parties under operating leases include:



	Year End
	2015			2014 (a)
Land	$	165,667		$	106,883
Buildings and improvements	188,621			117,122
Office, restaurant and transportation equipment	1,162			1,713
	355,450			225,718
Accumulated depreciation and amortization	(63,476		)	(38,826		)
	$	291,974		$	186,892

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(a) 2014 reflects corrections to the amounts disclosed in the 2014 Form 10-K. The 2014 Form 10-K disclosed properties of $768,498, which included land of $371,174, buildings and improvements of $399,541 and office, restaurant and transportation equipment of $160,514, net of accumulated depreciation and amortization of $162,731, which erroneously included properties owned by the Company that were not leased to franchisees and other third parties. The Company assessed the materiality of the misstatement on the 2014 consolidated financial statements and related notes and concluded that while not material in the context of the financial statements taken as a whole, the 2014 amounts within the table should be corrected to provide greater comparability. The incorrect amounts disclosed in the 2014 Form 10-K had no effect on the 2014 consolidated financial statements.

Our net investment in direct financing leases is as follows:



	Year Ended
	2015			2014
Future minimum rental receipts	$	200,213		$	109,674
Unearned income	(135,426		)	(74,102		)
Net investment in direct financing leases	64,787			35,572
Net current investment in direct financing leases (a)	(25		)	(193		)
Net non-current investment in direct financing leases (b)	$	64,762		$	35,379

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(a)	Included in “Accounts and notes receivable.”


(b)	Included in “Other assets.”