SAFEWAY INC | 2013 | FY | 3


Lease Obligations
At year-end 2013, Safeway leased approximately 54% of its stores. Most leases have renewal options, typically with increased rental rates during the option period. Certain of these leases contain options to purchase the property at amounts that approximate fair market value.
As of year-end 2013, future minimum rental payments applicable to non-cancelable capital and operating leases with remaining terms in excess of one year were as follows (in millions):
 
Capital
leases
 
Operating
leases
2014
$
83.7

 
$
470.3

2015
80.8

 
430.3

2016
73.7

 
397.3

2017
64.3

 
351.1

2018
55.1

 
299.5

Thereafter
298.4

 
1,781.5

Total minimum lease payments
656.0

 
$
3,730.0

Less amounts representing interest
(231.2
)
 
 
Present value of net minimum lease payments
424.8

 
 
Less current obligations
(49.3
)
 
 
Long-term obligations
$
375.5

 
 

Future minimum lease payments under non-cancelable capital and operating lease agreements have not been reduced by future minimum sublease rental income of $173.6 million.
Amortization expense for property under capital leases was $46.1 million in 2013, $26.3 million in 2012 and $24.6 million in 2011. Accumulated amortization of property under capital leases was $251.9 million at year-end 2013 and $223.1 million at year-end 2012.
The following schedule shows the composition of total rental expense for all operating leases (in millions):
 
 
2013
2012
2011
Property leases:
 
 
 
Minimum rentals
$
372.1

$
371.0

$
366.6

  Contingent rentals (1)
7.3

7.7

7.6

Less rentals from subleases
(11.1
)
(9.4
)
(8.0
)
 
368.3

369.3

366.2

Equipment leases
20.4

20.4

20.1

 
$
388.7

$
389.7

$
386.3

 (1) 
In general, contingent rentals are based on individual store sales.

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