Macy's 2014 Annual Report Download - page 63

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-16
Capitalized leases are included in the Consolidated Balance Sheets as property and equipment while the related
obligation is included in short-term ($1 million) and long-term ($29 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 $12 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 $317 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.
Rental expense consists of:
2014 2013 2012
(millions)
Real estate (excluding executory costs)
Capitalized leases –
Contingent rentals...................................................................... $ — $ — $ —
Operating leases –
Minimum rentals........................................................................ 265 256 248
Contingent rentals...................................................................... 22 22 21
287 278 269
Less income from subleases –
Operating leases......................................................................... (8)(10)(11)
$ 279 $ 268 $ 258
Personal property – Operating leases....................................................... $ 12 $ 11 $ 11
Included as a reduction to the expense above is deferred rent amortization of $7 million, $8 million and $7 million
for 2014, 2013 and 2012, respectively, related to contributions received from landlords.