Lowe's 2014 Annual Report Download - page 70

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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 on 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
Obli
g
ations To tal
2015 $ 464
$ 85
$ 549
2016 470
72
542
2017 461
61
522
2018 440
57
497
2019 410
53
463
Later years 3,234
467
3,701
Total minimum lease payments $ 5,479
$ 795
$ 6,274
Less amount representing interest (395 )
Present value of minimum lease payments 400
Less current maturities (44 )
Present value of minimum lease payments, less current maturities $ 356
Rental expenses under operating leases were $445 million, $421 million and $409 million in 2014, 2013 and 2012,
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 January 30, 2015, the Company had non-cancelable commitments of $847 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: 2015, $745 million; 2016, $61 million; 2017, $39 million; 2018, $1 million; 2019, $1 million.
At January 30, 2015, the Company held standby and documentary letters of credit issued under banking arrangements which
totaled $66 million. The majority of the Company’s letters of credit were issued for insurance contracts.
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