Macy's 2014 Annual Report Download - page 62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-15
Pursuant to the Program Agreement, the Company continues to provide certain servicing functions related to the
accounts and related receivables owned by Citibank and receives compensation from Citibank for these services. The
amounts earned under the Program Agreement related to the servicing functions are deemed adequate compensation and,
accordingly, no servicing asset or liability has been recorded on the Consolidated Balance Sheets.
Amounts received under the Program Agreement were $975 million for 2014, $928 million for 2013 and $865
million for 2012, and are treated as reductions of SG&A expenses on the Consolidated Statements of Income. The
Company’s earnings from credit operations, net of servicing expenses, were $776 million for 2014, $731 million for 2013,
and $663 million for 2012.
4. Properties and Leases
January 31,
2015 February 1, 2014
(millions)
Land ................................................................................................................................... $ 1,664 $ 1,696
Buildings on owned land ................................................................................................... 5,049 5,405
Buildings on leased land and leasehold improvements ..................................................... 1,819 2,041
Fixtures and equipment...................................................................................................... 4,828 4,811
Leased properties under capitalized leases ........................................................................ 34 43
13,394 13,996
Less accumulated depreciation and amortization....................................................... 5,594 6,066
$ 7,800 $ 7,930
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 January 31, 2015, for noncancellable leases are:
Capitalized
Leases Operating Leases Total
(millions)
Fiscal year
2015.......................................................................................................... $ 3 $ 260 $ 263
2016.......................................................................................................... 3 264 267
2017.......................................................................................................... 3 246 249
2018.......................................................................................................... 3 232 235
2019.......................................................................................................... 3 214 217
After 2019 ................................................................................................ 43 2,351 2,394
Total minimum lease payments................................................................ 58 $ 3,567 $ 3,625
Less amount representing interest............................................................ 28
Present value of net minimum capitalized lease payments...................... $ 30