OfficeMax 2014 Annual Report Download - page 97
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Table of Contents
For tenant improvement allowances, scheduled rent increases, and rent holidays, a deferred rent liability is recognized and amortized over the terms of the
related lease as a reduction of rent expense. Rent related accruals totaled approximately $275 million and $324 million at December 27, 2014 and
December 28, 2013, respectively. The short-term and long-term components of these liabilities are included in Accrued expenses and other current liabilities
and Deferred income taxes and other long-term liabilities, respectively, on the Consolidated Balance Sheets.
Rent expense, including equipment rental, was $682 million, $458 million and $429 million in 2014, 2013, and 2012, respectively. Rent expense was
reduced by sublease income of $6 million in 2014, $4 million in 2013, and $5 million in 2012.
Future minimum lease payments due under the non-cancelable portions of leases as of December 27, 2014 include facility leases that were accrued as store
closure costs and are as follows.
(In millions)
2015 $ 697
2016 558
2017 424
2018 309
2019 211
Thereafter 454
2,653
Less sublease income 43
Total $2,610
These minimum lease payments do not include contingent rental payments that may be due based on a percentage of sales in excess of stipulated amounts.
As of December 27, 2014 and December 28, 2013, unfavorable lease deferred credit for store leases with terms above market value amounted to $33 million
and $52 million, respectively, and are included in Deferred income taxes and other long-term liabilities in the Consolidated Balance Sheets. The unfavorable
lease values are amortized on a straight-line basis over the lives of the leases, unless the facility has been identified for closure under the Real Estate Strategy.
In 2014, the net amortization of favorable and unfavorable lease values reduced rent expense by approximately $9 million. Refer to Note 5 for further details
on favorable leases.
Unfavorable leases estimated future amortization is as follows:
(In millions)
2015 $12
2016 9
2017 6
2018 4
2019 1
Thereafter 1
Total $33
The Company has capital lease obligations primarily related to buildings and equipment. Refer to Note 8 for further details on amounts due related to capital
lease obligations.
95