NOTE 10. LEASES

The Company leases retail stores and other facilities, vehicles, and equipment under operating lease agreements. Facility leases typically are for a fixed non-cancellable term with one or more renewal options. In addition to minimum rentals, the Company is required to pay certain executory costs such as real estate taxes, insurance and common area maintenance on most of the facility leases. Many lease agreements contain tenant improvement allowances, rent holidays, and/or rent escalation clauses. Certain leases contain provisions for additional rent to be paid if sales exceed a specified amount, though such payments have been immaterial during the years presented.

For tenant improvement allowances, scheduled rent increases, and rent holidays, a deferred rent liability is recognized and amortized over the terms of the related lease as a reduction of rent expense. Rent related accruals totaled approximately $275 million and $324 million at December 27, 2014 and December 28, 2013, respectively. The short-term and long-term components of these liabilities are included in Accrued expenses and other current liabilities and Deferred income taxes and other long-term liabilities, respectively, on the Consolidated Balance Sheets.

Rent expense, including equipment rental, was $682 million, $458 million and $429 million in 2014, 2013, and 2012, respectively. Rent expense was reduced by sublease income of $6 million in 2014, $4 million in 2013, and $5 million in 2012.

Future minimum lease payments due under the non-cancelable portions of leases as of December 27, 2014 include facility leases that were accrued as store closure costs and are as follows.


(In millions)
2015	$	697
2016		558
2017		424
2018		309
2019		211
Thereafter		454

		2,653
Less sublease income		43

Total	$	2,610

These minimum lease payments do not include contingent rental payments that may be due based on a percentage of sales in excess of stipulated amounts.

As of December 27, 2014 and December 28, 2013, unfavorable lease deferred credit for store leases with terms above market value amounted to $33 million and $52 million, respectively, and are included in Deferred income taxes and other long-term liabilities in the Consolidated Balance Sheets. The unfavorable lease values are amortized on a straight-line basis over the lives of the leases, unless the facility has been identified for closure under the Real Estate Strategy. In 2014, the net amortization of favorable and unfavorable lease values reduced rent expense by approximately $9 million. Refer to Note 5 for further details on favorable leases.

Unfavorable leases estimated future amortization is as follows:


(In millions)
2015	$	12
2016		9
2017		6
2018		4
2019		1
Thereafter		1

Total	$	33

The Company has capital lease obligations primarily related to buildings and equipment. Refer to Note 8 for further details on amounts due related to capital lease obligations.