Lowe's 2012 Annual Report Download - page 68

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54
NOTE 13: Leases
The Company leases facilities and land for certain facilities under agreements with original terms generally of 20 years.
The leases generally contain provisions for four to six renewal options of five years each. Some lease agreements also
provide for contingent rentals based on sales performance in excess of specified minimums or changes in the consumer
price index. Contingent rentals were not significant for any of the periods presented. The Company subleases certain
properties that are not used in its operations. Sublease income was not significant for any of the periods presented.
The future minimum rental payments required under operating leases and capitalized lease obligations having initial or
remaining non-cancelable lease terms in excess of one year are summarized as follows:
(In millions)
Fiscal Year
Operating
Leases
Capitalized
Lease
Obligations Total
2013 ...................................................................................................................... $ 420 $ 79 $ 499
2014 ...................................................................................................................... 412 76 488
2015 ...................................................................................................................... 409 68 477
2016 ...................................................................................................................... 406 56 462
2017 ...................................................................................................................... 395 46 441
Later years ............................................................................................................ 3,478 383 3,861
Total minimum lease payments ......................................................................... $ 5,520 $ 708 $ 6,228
Less amount representing interest ......................................................................... (289)
Present value of minimum lease payments ....................................................... 419
Less current maturities .......................................................................................... (44)
Present value of minimum lease payments, less current maturities............... $375
Rental expenses under operating leases were $409 million, $410 million and $402 million in 2012, 2011 and 2010,
respectively, and were recognized in SG&A expense. Excluded from these amounts are rental expenses associated with
closed locations which were recognized as exit costs in the period of closure.
NOTE 14: Commitments and Contingencies
The Company is a defendant in legal proceedings considered to be in the normal course of business, none of which,
individually or collectively, are expected to be material to the Company’s financial statements. In evaluating liabilities
associated with its various legal proceedings, the Company has accrued for probable liabilities associated with these
matters. The amounts accrued were not material to the Company’s consolidated financial statements in any of the years
presented. Reasonably possible losses for any of the individual legal proceedings which have not been accrued were not
material to the Company’s consolidated financial statements.
As of February 1, 2013, the Company had non-cancelable commitments of $945 million related to certain marketing and
information technology programs, and purchases of merchandise inventory. Payments under these commitments are
scheduled to be made as follows: 2013, $477 million; 2014, $226 million; 2015, $223 million; 2016, $10 million; 2017, $9
million.
At February 1, 2013, the Company held standby and documentary letters of credit issued under banking arrangements
which totaled $74 million. The majority of the Company’s letters of credit were issued for insurance and construction
contracts.
NOTE 15: Related Parties
A brother-in-law of the Company’s Chief Customer Officer is a senior officer and shareholder of a vendor that provides
millwork and other building products to the Company. The Company purchased products from this vendor in the amount of
$78 million in 2012 and $82 million in both 2011 and 2010. Amounts payable to this vendor were insignificant at February
1, 2013 and February 3, 2012.