We lease certain retail locations, warehouses, distribution centers, office space, land, equipment and software. Assets held under capital leases are included in property and equipment. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date we take possession of the property. At lease inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably assured. The exercise of lease renewal options is at our sole discretion. The expected lease term is used to determine whether a lease is capital or operating and is used to calculate straight-line rent expense. Additionally, the depreciable life of leased buildings and leasehold improvements is limited by the expected lease term.

Rent expense is included in SG&A expenses. Some of our lease agreements include rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. Certain leases require us to pay real estate taxes, insurance, maintenance and other operating expenses associated with the leased premises. These expenses are classified in SG&A, consistent with similar costs for owned locations. Sublease income received from tenants who rent properties is recorded as a reduction to SG&A expense.

Rent Expense (millions)	2011			2010			2009



Property and equipment	$	193		$	188		$	187
Software		33			25			27
Sublease income (a)		(61	)		(13	)		(13	)

Total rent expense	$	165		$	200		$	201

Total capital lease interest expense was $69 million in 2011 (including $44 million of interest expense on Canadian capitalized leases), $16 million in 2010, and $10 million in 2009 and is included within other interest expense on the Consolidated Statements of Operations.

Most long-term leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years. Certain leases also include options to purchase the leased property. Assets recorded under capital leases as of January 28, 2012 and January 29, 2011 were $1,752 million and $380 million, respectively.

Future Minimum Lease Payments (millions)	Operating Leases (a)		Capital Leases (b)		Sublease Income			Total



2012	$	194	$	122	$	(84	)	$	232
2013		197		118		(12	)		303
2014		157		123		(6	)		274
2015		151		121		(5	)		267
2016		144		120		(4	)		260
After 2016		3,045		3,736		(71	)		6,710

Total future minimum lease payments	$	3,888	$	4,340	$	(182	)	$	8,046
Less: Interest (c)				(2,651)

Present value of future minimum capital lease payments (d)			$	1,689

(a): Total contractual lease payments include $1,910 million related to options to extend lease terms that are reasonably assured of being exercised and also includes $171 million of legally binding minimum lease payments for stores that are expected to open in 2012 or later.
(b): Capital lease payments include $2,894 million related to options to extend lease terms that are reasonably assured of being exercised.
(c): Calculated using the interest rate at inception for each lease.
(d): Includes the current portion of $22 million.

The acquisition of leasehold interests in Canada contributed additional discounted future minimum capital lease payments of $1.3 billion, reflected in the table above.