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LEASES | 6 Months Ended
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Aug. 04, 2019
Leases [Abstract] |
LEASES | NOTE M. LEASES We lease store locations, distribution and manufacturing facilities, corporate facilities, customer care centers and certain equipment for our U.S. and foreign operations with initial terms generally ranging from 2 to 22 years. We determine whether an arrangement is or contains a lease at inception by evaluating whether an identified asset exists that we control over the term of the arrangement. Lease commencement is determined to be when the lessor provides us access to, and the right to control, the identified asset. The rental payments for our store leases are typically structured as either: minimum rent; minimum rate with stated increases or increases based on a future index; 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. We consider lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from our calculation of lease liabilities. Our variable lease payments include: rent payments that are based on a percentage of sales; contingent payments until the resolution of the contingency is reasonably certain; and rent increases based on a future index. Upon lease commencement, we recognize the lease liability measured at the present value of the fixed future minimum lease payments. We have elected the practical expedient to not separate lease and non-lease components. Therefore, lease payments included in the measurement of the lease liability include all fixed payments in the lease arrangement. We record a right-of-use asset for an amount equal to the lease liability, increased for any prepaid lease costs and initial direct costs and reduced by any lease incentives. We remeasure the lease liability and right-of-use asset when a change to our future minimum lease payments occurs. Key assumptions and judgements included in the determination of the lease liability include the discount rate applied to present value the future lease payments, and the exercise of renewal and termination options. Many of our leases contain renewal options and early termination options. The option periods are generally not included in the lease term used to measure our lease liabilities and right-of-use assets upon commencement as exercise of the options is not reasonably certain. We remeasure the lease liability and right-of-use asset when we are reasonably certain to exercise a renewal or early termination option. Discount Rate Our leases do not provide information about the rate implicit in the lease. Therefore, we utilized an incremental borrowing rate to calculate the present value of our future lease obligations. The incremental borrowing rate represents the rate of interest we would have to pay on a collateralized borrowing, for an amount equal to the lease payments, over a similar term and in a similar economic environment. The components of lease costs for the thirteen and twenty-six weeks ended August 4, 2019 are as follows:
In thousands |  | Thirteen weeks ended August 4, 2019 |  |  | Twenty-six weeks ended August 4, 2019 |
Operating lease costs |  | $ | 66,143 |  |  | $ | 131,111 |
Variable lease costs |  |  | 5,129 |  |  |  | 9,763 |
Total lease costs |  | $ | 71,272 |  |  | $ | 140,874 |
Sublease income and short-term lease costs were not material to us for the thirteen and twenty-six weeks ended August 4, 2019. Supplemental cash flow information related to our leases for the thirteen and twenty-six weeks ended August 4, 2019 are as follows:
In thousands |  | Thirteen weeks ended August 4, 2019 |  |  | Twenty-six weeks ended August 4, 2019 |
Cash paid for amounts included in the measurement of operating lease liabilities |  | $ | 71,580 |  |  | $ | 141,394 |
Net additions to right-of-use assets |  |  | 63,871 |  |  |  | 82,393 |
Weighted average remaining operating lease term and incremental borrowing rate as of August 4, 2019 are as follows:
Weighted average remaining lease term (years) |  |  | 7.55 |
Weighted average incremental borrowing rate |  |  | 3.86 | %
As of August 4, 2019, the future minimum lease payments under our operating lease liabilities are as follows:
In thousands |  |  |
Remaining fiscal 2019 |  | $ | 143,927 |
Fiscal 2020 |  |  | 265,375 |
Fiscal 2021 |  |  | 233,052 |
Fiscal 2022 |  |  | 201,593 |
Fiscal 2023 |  |  | 170,283 |
Fiscal 2024 |  |  | 146,808 |
Fiscal 2025 and thereafter |  |  | 441,650 |
Total lease payments |  |  | 1,602,688 |
Less interest |  |  | (231,679 | )
Total operating lease liability |  |  | 1,371,009 |
Less current operating lease liability |  |  | (222,978 | )
Total non-current operating lease liability |  | $ | 1,148,031 |
As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments under non-cancellable operating leases as of February 3, 2019 were as follows:
In thousands |  |  |
Fiscal 2019 |  | $ | 292,387 |
Fiscal 2020 |  |  | 262,429 |
Fiscal 2021 |  |  | 225,755 |
Fiscal 2022 |  |  | 190,263 |
Fiscal 2023 |  |  | 160,308 |
Thereafter |  |  | 559,802 |
Total |  | $ | 1,690,944 |
Memphis-Based Distribution Facility In fiscal 2015, we entered into an agreement with a partnership comprised of the estate of W. Howard Lester, our former Chairman of the Board and Chief Executive Officer, and the estate of James A. McMahan, a former Director Emeritus and significant stockholder and two unrelated parties to lease a distribution facility in Memphis, Tennessee through July 2017. In fiscal 2017, we exercised the first of two one-year extensions available under the lease to extend the term through July 2018. Subsequently, in fiscal 2017, we amended the lease to further extend the term through July 2020. The amended lease provides for two additional one-year renewal options. Rental payments under this agreement including applicable taxes, insurance and maintenance expenses were not material to us for the thirteen or twenty-six weeks ended August 4, 2019 or July 29, 2018.

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
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