7. Operating Lease Commitments
We lease portions of our corporate facilities and conduct the majority
of our retail and distribution operations from leased locations. The
terms of the lease agreements generally range from one to 20 years.
The leases require payment of real estate taxes, insurance and common
area maintenance in addition to rent. Most of the leases contain
renewal options and escalation clauses, and certain store leases
require contingent rents based on specified percentages of revenue. In
addition, certain store leases provide us an early cancellation option
if revenue for a specified period were not to reach a specified level
as defined in the lease. Other leases contain covenants related to
maintenance of financial ratios. Also, we lease certain equipment
under operating leases. Transaction costs associated with the sale and
lease back of properties and any gain or loss are recognized over the
terms of the lease agreements. Proceeds from the sale and lease back
of properties are included in the net change in recoverable costs from
developed properties.
The composition of
rental expenses for all operating leases during the past three fiscal
years, including leases of buildings and equipment, was as follows:
2003
2002
2001
Minimum rentals
$ 439
$ 366
$ 286
Percentage rentals
1
1
1
Total rent expense for
continuing operations
$ 440
$ 367
$ 287
Minimum rentals
$ 144
$ 152
$ 13
Percentage rentals
1
1
—
Total rent expense for
discontinued operations
$ 145
$ 153
$ 13
Future minimum lease
obligations, net of subleases rental income, by fiscal year (not
including percentage rentals) for all operating leases at March 1,
2003, were as follows:
Fiscal Year
Continuing Operations
Discontinued Operations
2004
$ 413
$ 92
2005
395
89
2006
363
68
2007
347
54
2008
340
44
Thereafter
2,576
147
8. Benefit Plans
We sponsor retirement savings plans for employees meeting certain age
and service requirements. The plans provide for Company-matching
contributions, which are subject to annual approval by our Board of
Directors. The total matching contributions were $13, $10 and $7 in
fiscal 2003, 2002 and 2001, respectively, for continuing operations.
We have a deferred compensation plan for certain management employees
and our Board of Directors. The liability for compensation deferred
under this plan was $42 and $33 at March 1, 2003, and March 2, 2002,
respectively, and is included in long-term liabilities of continuing
operations. We have elected to match our liability under the plan
through the purchase of life insurance. The cash value of the
insurance, which includes funding for future deferrals, was $51 and
$36 in fiscal 2003 and 2002, respectively, and is included in other
assets from continuing operations. Both the asset and the liability
are carried at fair value. >>
