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73
2014 Annual Report
6 | Leases
The Company leases most of its retail and mail order locations, ten of its distribution centers and certain corporate
offices under noncancelable operating leases, typically with initial terms of 15 to 25 years and with options that
permit renewals for additional periods. The Company also leases certain equipment and other assets under noncan-
celable operating leases, typically with initial terms of 3 to 10 years. Minimum rent is expensed on a straight-line
basis over the term of the lease. In addition to minimum rental payments, certain leases require additional payments
based on sales volume, as well as reimbursement for real estate taxes, common area maintenance and insurance,
which are expensed when incurred.
The following table is a summary of the Company’s net rental expense for operating leases for the years ended
December 31:
IN MILLIONS
2014 2013 2012
Minimum rentals
$ 2,320
$ 2,210 $ 2,165
Contingent rentals
36
41 48
2,356
2,251 2,213
Less: sublease income
(21)
(21) (20)
$ 2,335
$ 2,230 $ 2,193
The following table is a summary of the future minimum lease payments under capital and operating leases as of
December 31, 2014:
Capital Operating
IN MILLIONS Leases Leases (1)
2015 $ 47 $ 2,279
2016 47 2,220
2017 47 2,121
2018 48 2,007
2019 48 1,861
Thereafter 573 16,794
Total future lease payments 810 $ 27,282
Less: imputed interest (419)
Present value of capital lease obligations $ 391
(1) Future operating lease payments have not been reduced by minimum sublease rentals of $203 million due in the future under
noncancelable subleases.
The Company finances a portion of its store development program through sale-leaseback transactions. The proper-
ties are generally sold at net book value, which generally approximates fair value, and the resulting leases generally
qualify and are accounted for as operating leases. The operating leases that resulted from these transactions are
included in the above table. The Company does not have any retained or contingent interests in the stores and
does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback
transactions. Proceeds from sale-leaseback transactions totaled $515 million in 2014, $600 million in 2013 and
$529 million in 2012.