Accounting for Leases

12 Months Ended

Jan. 31, 2016

Accounting for Leases

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 payments for 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 rent expense for all operating leases was as follows:

In thousands	Fiscal 2015			Fiscal 2014			Fiscal 2013
Rent expense	$	224,564		$	215,221		$	201,727
Contingent rent expense		33,985			32,699			34,608
Rent expense before deferred lease incentive income		258,549			247,920			236,335
Deferred lease incentive income		(24,679	)		(24,420	)		(25,385	)
Less: sublease rental income		(608	)		(560	)		(536	)
Total rent expense1	$	233,262		$	222,940		$	210,414

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

The aggregate future minimum annual cash rental payments under non-cancelable operating leases in effect at January 31, 2016 were as follows:

In thousands	Lease Commitments1
Fiscal 2016	$    257,805
Fiscal 2017	242,036
Fiscal 2018	218,381
Fiscal 2019	197,055
Fiscal 2020	168,046
Thereafter	650,585
Total	$ 1,733,908

¹  Projected cash payments include only those amounts that are fixed and determinable as of the reporting date and are not necessarily representative of future expected rent expense. We currently pay rent for certain store locations based on a percentage of store sales. As future store sales cannot be predicted with certainty, projected payments for these locations are based on minimum rent, which is generally higher than rent based on a percentage of store sales. We incur other lease obligation expenses, such as common area maintenance 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.