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Leases

12 Months Ended

Apr. 25, 2020

During the first quarter of fiscal 2020, we adopted ASU 2016-02, Leases (Topic 842) and all related amendments. The guidance requires lessees to recognize substantially all leases on their balance sheet as a right-of-use ("ROU") asset and a lease liability. The adoption of ASU 2016-02 resulted in an increase in total long-term assets and total liabilities of $314.2 million at the beginning of fiscal 2020.

The Company leases real estate for retail stores, distribution centers, warehouses, plants, showrooms and office space. We also have equipment leases for tractors/trailers, IT and office equipment and vehicles. We determine if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all the economic benefits from the use of that identified asset. Most of our real estate leases include options to renew or terminate early. We assess these options to determine if we are reasonably certain of exercising these options based on all relevant economic and financial factors. Any options that meet these criteria are included in the lease term at lease commencement.

Most of our leases do not have an interest rate implicit in the lease. As a result, for purposes of measuring our ROU asset and lease liability, we determine our incremental borrowing rate by applying a spread above the U.S. Treasury borrowing rates. In the case an interest rate is implicit in a lease we will use that rate as the discount rate for that lease. Some of our leases contain variable rent payments based on a Consumer Price Index or percentage of sales. Due to the variable nature of these costs, they are not included in the measurement of the ROU asset and lease liability.

The Company has elected to apply the practical expedients permitted under transition guidance to forgo the restatement of comparative periods and to not reassess leases entered into prior to adoption. In addition, we have elected the practical expedient to not separate lease and non-lease components when determining the ROU asset and lease liability. We have also made an accounting policy election to not recognize an ROU asset and lease liability on the balance sheet for those leases with an initial term of one year or less and instead, such liabilities will be expensed on a straight-line basis over the lease term.

COVID-19 Impact

In response to the COVID-19 global pandemic, beginning in April of fiscal 2020, we have secured rent relief from several of our lessors, most often in the form of the deferral of rent payments for one or more months. Under these agreements, certain rent payments will be deferred without penalty and will be paid back over varying periods. In accordance with FASB Staff Q&A - Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic ("FASB Staff Q&A") issued in April 2020, we have elected to account for lease deferrals resulting directly from COVID-19 as if the enforceable rights and obligations for the deferrals existed in the respective contracts at lease inception and as such we will not account for the deferrals as lease modifications. Guidance from the FASB Staff Q&A provided methods to account for such rent deferrals which include the option to treat the lease as if no changes to the lease contract were made or to treat the deferred

payments as variable lease payments. The FASB Staff Q&A allows entities to select the most practical approach and does not require the same approach be applied consistently to all leases. For the majority of our leases, we elected to account for the deferrals as if no changes to the lease contract were made and continued to recognize lease expense, on a straight-line basis, during the deferral period. During April of fiscal 2020, payment deferrals and concessions totaled $4.4 million, the majority of which was recorded in other current liabilities on the consolidated balance sheet.

Supplemental balance sheet information pertaining to our leases is as follows:



(Amounts in thousands)	4/25/20
Operating leases
ROU assets	$	318,634
Lease liabilities, short-term	64,363
Lease liabilities, long-term	270,162
Financing leases
ROU assets	$	13
Lease liabilities, short-term	13

The ROU assets by segment are as follows:



(Amounts in thousands)	4/25/20
Upholstery	$	65,668
Casegoods	3,997
Retail	236,719
Corporate & Other	12,263
Total ROU assets	$	318,647

The components of lease cost are as follows:



(Amounts in thousands)	Year Ended April 25, 2020
Operating lease cost	$	76,223
Financing lease cost	166
Short-term lease cost	248
Variable lease cost (1)	(40		)
Less: Sublease income	(2,504		)
Total lease cost	$	74,093


(1)	Includes deferred payments on select leases in accordance with the FASB Staff Q&A.

The following tables present supplemental lease disclosures:



	Year Ended April 25, 2020
(Amounts in thousands)	Operating Leases		Financing Leases
Cash paid for amounts included in the measurement of lease liabilities	$	77,176	$	165
Lease liabilities arising from new ROU assets	72,061		—

The following table presents our undiscounted cash flows as of April 25, 2020, and our minimum contractual obligations on our leases as of April 27, 2019:



	4/25/20				4/27/19
(Amounts in thousands)	Operating Leases		Financing Leases		Operating Leases		Financing Leases
Within one year	$	75,500	$	13	$	76,508	$	180
After one year and within two years	65,458		—		71,544		19
After two years and within three years	54,870		—		58,763		—
After three years and within four years	44,358		—		46,541		—
After four years and within five years	37,357		—		36,082		—
After five years	101,006		—		102,782		—
Total lease payments	378,549		13		$	392,220	$	199
Less: Interest	44,024		—
Total lease obligations	$	334,525	$	13

Leases

(Amounts in thousands)

Operating Leases

Financing Leases

Weighted-average remaining lease term (years)

Weighted-average discount rate