KROGER CO | 2013 | FY |

10.       LEASES AND LEASE-FINANCED TRANSACTIONS

 

While the Company’s current strategy emphasizes ownership of store real estate, the Company operates primarily in leased facilities. Lease terms generally range from 10 to 20 years with options to renew for varying terms. Terms of certain leases include escalation clauses, percentage rent based on sales or payment of executory costs such as property taxes, utilities or insurance and maintenance.  Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis beginning with the earlier of the lease commencement date or the date the Company takes possession.  Portions of certain properties are subleased to others for periods generally ranging from one to 20 years.

 

Rent expense (under operating leases) consists of:

 

		2013			2012			2011
Minimum rentals		$	706		$	727		$	715
Contingent payments		13			13			13
Tenant income		(106		)	(112		)	(109		)
Total rent expense		$	613		$	628		$	619

 

Minimum annual rentals and payments under capital leases and lease-financed transactions for the five years subsequent to 2013 and in the aggregate are:

 

		Capital Leases			Operating Leases			Lease- Financed Transactions
2014		$	62		$	832		$	6
2015		57			770			7
2016		53			708			7
2017		52			634			8
2018		43			563			8
Thereafter		349			3,101			83
		616			$	6,608		$	119
Less estimated executory costs included in capital leases		—
Net minimum lease payments under capital leases		616
Less amount representing interest		204
Present value of net minimum lease payments under capital leases		$	412

 

Total future minimum rentals under noncancellable subleases at February 1, 2014, were $217.