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LEASES | 12 Months Ended
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Aug. 31, 2021
LEASES [Abstract] |
LEASES | NOTE 12 – LEASES In accordance with ASC 842, the Company determines if an arrangement is a lease at inception or modification of a contract and classifies each lease as either operating or finance lease at commencement. The Company only reassesses lease classification subsequent to commencement upon a change to the expected lease term or the contract being modified. As of August 31, 2021, the Company only has operating leases for its clubs, distribution centers, office space, and land. Operating leases, net of accumulated amortization, are included in operating lease right of use (“ROU”) assets, and current and non-current operating lease liabilities, on the Company’s consolidated balance sheets. Lease expense for operating leases is included in selling, general and administrative expense on the Company’s consolidated statements of income. Leases with an initial term of twelve months or less are not recorded on the Company’s consolidated balance sheet. The Company is generally obligated for the cost of property taxes, insurance, and maintenance relating to its leases, which are often variable lease payments. Such costs are included in selling, general and administrative expense in the consolidated statements of income. Certain of the Company's lease agreements provide for lease payments based on future sales volumes at the leased location, or include rental payments adjusted periodically for inflation or based on an index, which are not measurable at the inception of the lease. The Company expenses such variable amounts in the period incurred, which is the period in which it becomes probable that the specified target that triggers the variable lease payments will be achieved. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the reasonably certain lease term. The operating lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option or if an economic penalty may be incurred if the option is not exercised. The initial lease term of the Company’s operating leases range from two to 30 years. Where the Company's leases do not provide an implicit rate, a collateralized incremental borrowing rate ("IBR") is used to determine the present value of lease payments. The IBR is based on a yield curve derived by publicly traded bond offerings for companies with similar credit characteristics that approximate the Company's market risk profile. In addition, we adjust the IBR for jurisdictional risk derived from quoted interest rates from financial institutions to reflect the cost of borrowing in the Company’s local markets. The following table is a summary of the Company’s components of total lease costs for fiscal year 2021 and 2020 (in thousands):
|  | Years Ended August 31,
|  | 2021 |  | 2020
Operating lease cost |  | $ | 17,724 |  | $ | 17,305
Short-term lease cost |  |  | 167 |  |  | 236
Variable lease cost |  |  | 4,410 |  |  | 3,679
Sublease income |  |  | (891) |  |  | (1,061)
Total lease costs |  | $ | 21,410 |  | $ | 20,159
The weighted average remaining lease term and weighted average discount rate for operating leases as of August 31, 2021 and August 31, 2020 were as follows:
|  | Years Ended August 31,
|  | 2021 |  | 2020
Weighted average remaining lease term in years |  | 18.3 |  | 18.2
Weighted average discount rate percentage |  | 6.7% |  | 6.4%
Supplemental cash flow information related to leases under which the Company is the lessee was as follows (amounts in thousands):
|  | Years Ended August 31,
|  | 2021 |  | 2020
Operating cash flows paid for operating leases |  | $ | 16,420 |  | $ | 15,392
The Company is committed under non-cancelable operating leases for the rental of facilities and land. Future minimum lease commitments for facilities under these leases with an initial term in excess of one year are as follows (in thousands):
|  | Leased
Years Ended August 31, |  | Locations
2022 |  | $ | 16,436
2023 |  |  | 15,442
2024 |  |  | 14,864
2025 |  |  | 14,606
2026 |  |  | 13,014
Thereafter |  |  | 176,386
Total future lease payments |  |  | 250,748
Less imputed interest |  |  | (112,966)
Total operating lease liabilities |  | $ | 137,782

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