LEASES

3 Months Ended

Jun. 27, 2020

The Company has operating leases for retail stores, distribution centers, corporate offices, data centers, and certain equipment. The Company’s leases generally have initial terms ranging from 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to early terminate the lease.

As of July 3, 2021, the Company’s finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or statements of cash flows.

The following components of lease expense are included in Selling, general and administrative expenses on the Company’s consolidated statements of operations for the second quarter and first two quarters of fiscal 2021 and 2020:


	Fiscal quarter ended				Two fiscal quarters ended
(dollars in thousands)	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
Operating lease cost	$	42,100	$	45,527	$	84,798	$	91,950




Variable lease cost (*)	16,276		19,219		32,674		35,504
Net lease cost	$	58,376	$	64,746	$	117,472	$	127,454

(*)Includes short-term leases, which are not material, and operating lease asset impairment charges.

Supplemental balance sheet information related to leases was as follows:


	Fiscal quarter ended
	July 3, 2021	June 27, 2020
Weighted average remaining operating lease term (years)	5.2	5.7
Weighted average discount rate for operating leases	3.30%	3.95%

Cash paid for amounts included in the measurement of operating lease liabilities in the second quarter and two first quarters of fiscal 2021 were $56.8 million and $114.7 million, respectively. Cash paid for amounts included in the measurement of operating lease liabilities in the second quarter and first two quarters of fiscal 2020 were $47.6 million and $97.8 million, respectively. The total cash paid in the second quarter and first two quarters of fiscal 2020 reflects the contractual amounts due to be paid in cash. For the fiscal quarter ended June 27, 2020, the Company deferred cash payments of $35.8 million of these amounts, which are included in the statement of cash flows as part of the change in Accounts payable and other liabilities.

Non-cash transactions to recognize operating assets and liabilities for new leases for the second quarter and first two quarters of fiscal 2021 were $4.3 million and $7.6 million, respectively. Non-cash transactions to recognize operating assets and liabilities for the second quarter and first two quarters of fiscal 2020 were $15.8 million and $45.2 million, respectively.

As of July 3, 2021, the maturities of lease liabilities were as follows:


(dollars in thousands)	Operating leases
Remainder of 2021	$	93,535
2022	159,881
2023	132,257
2024	105,945
2025	76,952
2026	54,170
After 2026	78,074
Total lease payments	$	700,814
Less: Interest	(57,663)
Present value of lease liabilities(*)	$	643,151

(*)As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments.