(8) Commitments and Contingencies

(a)Operating Leases

The Company conducts a major portion of its retail operations from leased premises. Initial terms of the leases are typically 20 years, followed by renewal options at five year intervals, and may include rent escalation clauses. Minimum rentals represent fixed lease obligations, including insurance and maintenance to the extent they are fixed in the lease. Contingent rentals represent variable lease obligations, including real estate taxes, insurance, maintenance and, for certain premises, additional rentals based on a percentage of sales in excess of stipulated minimums (excess rent). The payment of variable real estate taxes, insurance and maintenance is generally based on the Company’s pro-rata share of total shopping center square footage. The Company recognizes rent expense for operating leases with rent escalation clauses on a straight-line basis over the applicable lease term. The Company estimates excess rent, where applicable, based on annual sales projections and uses the straight-line method to amortize the cost to rent expense. The annual sales projections are reviewed periodically and adjusted if necessary. Additionally, the Company has operating leases for certain transportation and other equipment.

Total rental expense for 2016, 2015 and 2014 is as follows:



	2016			2015		2014
	(Amounts are in thousands)
Minimum rentals	$	419,032		426,703		439,525
Contingent rentals	125,406			123,152		118,839
Sublease rental income	(4,577		)	(4,979	)	(4,867	)
	$	539,861		544,876		553,497

As of December 31, 2016, future minimum lease payments for all noncancelable operating leases and related subleases are as follows:



Year	Minimum Rental Commitments			Sublease Rental Income		Net
		(Amounts are in thousands)
2017		$	428,303		4,869	423,434
2018		405,174			3,968	401,206
2019		375,484			3,601	371,883
2020		337,991			440	337,551
2021		301,747			230	301,517
Thereafter		1,893,907			1,066	1,892,841
		$	3,742,606		14,174	3,728,432

The Company also owns shopping centers which are leased to tenants for minimum monthly rentals plus contingent rentals. Minimum rentals represent fixed lease obligations, including insurance and maintenance. Contingent rentals represent variable lease obligations, including real estate taxes, insurance, maintenance and, for certain premises, excess rent. Rental income was $133,656,000, $95,519,000 and $63,026,000 for 2016, 2015 and 2014, respectively.

As of December 31, 2016, future minimum rental payments to be received for all noncancelable operating leases are as follows:



Year
(Amounts are in thousands)
2017	$	105,570
2018	88,336
2019	69,811
2020	52,371
2021	32,995
Thereafter	125,202
	$	474,285

(b)Letters of Credit

As of December 31, 2016, the Company had outstanding $7,597,000 in trade letters of credit and $11,799,000 in standby letters of credit to support certain purchase obligations.

(c)Litigation

The Company is subject from time to time to various lawsuits, claims and charges arising in the normal course of business. The Company believes its recorded reserves are adequate in light of the probable and estimable liabilities. The estimated amount of reasonably possible losses for lawsuits, claims and charges, individually and in the aggregate, is considered to be immaterial. In the opinion of management, the ultimate resolution of these legal proceedings will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.