Macy's 2012 Annual Report Download - page 62

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-15
4. Properties and Leases
February 2,
2013 January 28,
2012
(millions)
Land................................................................................................................................. $ 1,736 $ 1,689
Buildings on owned land................................................................................................. 5,398 5,234
Buildings on leased land and leasehold improvements................................................... 2,057 2,165
Fixtures and equipment ................................................................................................... 4,909 5,275
Leased properties under capitalized leases...................................................................... 43 43
14,143 14,406
Less accumulated depreciation and amortization..................................................... 5,947 5,986
$ 8,196 $ 8,420
In connection with various shopping center agreements, the Company is obligated to operate certain stores within the
centers for periods of up to twenty years. Some of these agreements require that the stores be operated under a particular name.
The Company leases a portion of the real estate and personal property used in its operations. Most leases require the
Company to pay real estate taxes, maintenance and other executory costs; some also require additional payments based on
percentages of sales and some contain purchase options. Certain of the Company’s real estate leases have terms that extend for
significant numbers of years and provide for rental rates that increase or decrease over time. In addition, certain of these leases
contain covenants that restrict the ability of the tenant (typically a subsidiary of the Company) to take specified actions
(including the payment of dividends or other amounts on account of its capital stock) unless the tenant satisfies certain financial
tests.
Minimum rental commitments (excluding executory costs) at February 2, 2013, for noncancellable leases are:
Capitalized
Leases Operating
Leases Total
(millions)
Fiscal year
2013................................................................................................................. $ 5 $ 257 $ 262
2014................................................................................................................. 4 249 253
2015................................................................................................................. 3 211 214
2016................................................................................................................. 3 183 186
2017................................................................................................................. 3 165 168
After 2017 ....................................................................................................... 49 1,649 1,698
Total minimum lease payments....................................................................... 67 $ 2,714 $ 2,781
Less amount representing interest................................................................... 32
Present value of net minimum capitalized lease payments............................. $ 35
Capitalized leases are included in the Consolidated Balance Sheets as property and equipment while the related obligation
is included in short-term ($3 million) and long-term ($32 million) debt. Amortization of assets subject to capitalized leases is
included in depreciation and amortization expense. Total minimum lease payments shown above have not been reduced by
minimum sublease rentals of $43 million on operating leases.
The Company is a guarantor with respect to certain lease obligations associated with The May Department Stores
Company and previously disposed subsidiaries or businesses. The leases, one of which includes potential extensions to 2070,
have future minimum lease payments aggregating $352 million and are offset by payments from existing tenants and
subtenants. In addition, the Company is liable for other expenses related to the above leases, such as property taxes and
common area maintenance, which are also payable by existing tenants and subtenants. Potential liabilities related to these
guarantees are subject to certain defenses by the Company. The Company believes that the risk of significant loss from the
guarantees of these lease obligations is remote.