Note M. Commitments

TJX is committed under long-term leases related to its continuing operations for the rental of real estate and fixtures and equipment. Most of TJX’s leases are store operating leases with ten-year terms and options to extend for one or more five-year periods in the U.S. and Canada and ten to fifteen year terms in Europe, some of which have options to extend. Many of the Company’s leases contain escalation clauses and we have the right to terminate some of the leases before the expiration date under specified circumstances and some with specified payments. In addition, TJX is generally required to pay insurance, real estate taxes and other operating expenses including, in some cases, rentals based on a percentage of sales. These expenses in the aggregate were approximately one-third of the total minimum rent in fiscal 2015, fiscal 2014 and fiscal 2013 and are not included in the table below.

The following is a schedule of future minimum lease payments for continuing operations as of January 31, 2015:


In thousands	Operating Leases
Fiscal Year
2016	$	1,303,196
2017		1,198,498
2018		1,055,838
2019		924,690
2020		778,074
Later years		2,348,705
Total future minimum lease payments	$	7,609,001

Rental expense under operating leases for continuing operations amounted to $1,321.6 million for fiscal 2015, $1,238.2 million for fiscal 2014 and $1,171.6 million for fiscal 2013. Rental expense includes contingent rent and is reported net of sublease income. Contingent rent paid was $15.2 million in fiscal 2015, $15.7 million in fiscal 2014 and $15.0 million in fiscal 2013. Sublease income was $0.8 million in fiscal 2015, $0.9 million in fiscal 2014 and in fiscal 2013. The total net present value of TJX’s minimum operating lease obligations approximated $6,499.2 million as of January 31, 2015.

We have entered into a lease agreement for the construction and occupancy of a new home office facility in Canada. We are deemed the owner of the construction project for accounting purposes and therefore the construction costs incurred to date by the lessor of $60.7 million are included as a construction in progress asset along with a related liability of the same amount on our balance sheet. The asset is included in “land and buildings” and the liability is included in “other long-term liabilities.” Upon completion of the project, a sale-leaseback analysis is performed to determine if the Company can record a sale to remove the assets and related obligation and record the lease as either an operating or capital lease obligation. If the Company is precluded from derecognizing the assets when construction is complete due to continuing involvement beyond a normal leaseback, the lease is accounted for as a financing transaction and the recorded asset and related financing obligation remain on the Consolidated Balance Sheet. Accordingly, the asset is depreciated over its estimated useful life in accordance with the Company’s policy and a portion of the lease payments is allocated to ground rent and treated as an operating lease. The portion of the lease payment allocated to ground rental expense is based on the fair value of the land at the commencement of construction. Lease payments allocated to the building are recognized as reductions to the financing obligation and interest expense. This transaction is disclosed in supplemental cash flow information as a non-cash investing and financing activity.

TJX had outstanding letters of credit totaling $42.9 million as of January 31, 2015 and $55.3 million as of February 1, 2014. Letters of credit are issued by TJX primarily for the purchase of inventory.