Accounting for Leases

12 Months Ended

Feb. 02, 2014

Note E: Accounting for Leases

Operating Leases

We lease store locations, distribution centers, customer care centers, corporate facilities and certain equipment for original terms ranging generally from 3 to 22 years. Certain leases contain renewal options for periods up to 20 years. The rental payment requirements in our store leases are typically structured as either: minimum rent; rent based on a percentage of store sales; minimum rent plus additional rent based on a percentage of store sales; or rent based on a percentage of store sales if a specified store sales threshold or contractual obligation of the landlord has not been met. Contingent rental payments, including rental payments that are based on a percentage of sales, cannot be predicted with certainty at the onset of the lease term. Accordingly, such contingent rental payments are recorded as incurred each period and are excluded from our calculation of deferred rent liability.

Total rental expense for all operating leases was as follows:


	Fiscal Year Ended
Dollars in thousands	Feb. 2, 2014 (52 Weeks)			Feb. 3, 2013 (53 Weeks)			Jan. 29, 2012 (52 Weeks)
Rent expense	$	201,727		$	189,060		$	186,346
Contingent rent expense		34,608			35,634			34,390
Rent expense before deferred lease incentive income		236,335			224,694			220,736
Deferred lease incentive income		(25,385	)		(26,694	)		(27,547	)
Less: sublease rental income		(536	)		(535	)		(382	)
Total rent expense¹	$	210,414		$	197,465		$	192,807

¹	Excludes all other occupancy-related costs including depreciation, common area maintenance, utilities and property taxes.

The aggregate future minimum annual cash rental payments under non-cancelable operating leases (excluding the Memphis-based distribution facility consolidated by us, see Note F) in effect at February 2, 2014 were as follows:


Dollars in thousands		Lease Commitments^1,2
Fiscal 2014	$	231,660
Fiscal 2015		207,128
Fiscal 2016		191,569
Fiscal 2017		165,737
Fiscal 2018		146,473
Thereafter		489,032
Total	$	1,431,599

¹	Represents future projected cash payments and, therefore, is not necessarily representative of future expected rental expense.

Projected cash payments include only those amounts that are fixed and determinable as of the reporting date. We currently pay rent for certain store locations based on a percentage of store sales. Projected payments for these locations are based on minimum rent, which is generally higher than rent based on a percentage of store sales, as future store sales cannot be predicted with certainty. We incur other lease obligation expenses, such as common area charges and other executory costs, which are not fixed in nature and are thus not included in the future projected cash payments reflected above. In addition, projected cash payments do not include any benefit from deferred lease incentive income, which is reflected within “Total rent expense” above.

- Definition

The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing.

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