Leases

6 Months Ended

Nov. 24, 2019

The Company has entered into various non-cancellable operating lease agreements for manufacturing and distribution facilities, vehicles, equipment and office space. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The Company leases property and equipment under finance leases. Gross assets recorded under finance leases, included in “Property and equipment, net,” were $3.8 million as of both November 24, 2019 and May 26, 2019. Accumulated amortization associated with finance leases was $0.4 million as of both November 24, 2019 and May 26, 2019.

The components of lease cost were as follows:



(In thousands, except term and discount rate)	Three Months Ended		Six Months Ended
	November 24, 2019		November 24, 2019
Finance lease cost:
Amortization of leased assets	$	29	$	57
Interest on lease liabilities	90		180
Operating lease cost	1,568		3,161
Variable lease cost and other	532		697
Total lease cost	$	2,219	$	4,095

Weighted-average remaining lease term:
Operating leases			13.11
Finance leases			3.10
Weighted-average discount rate:
Operating leases			5.27		%
Finance leases			9.99		%

Our leases have original lease periods ending between 2019 and 2040. The Company's maturity analysis of operating and finance lease liabilities as of November 24, 2019 were as follows:



(In thousands)	Operating Leases			Finance Leases			Total
Remainder of 2020	$	2,927		$	246		$	3,173
2021	4,795			455			5,250
2022	4,283			466			4,749
2023	3,612			3,497			7,109
2024	2,946			9			2,955
Thereafter	26,433			2			26,435
Total lease payments	44,996			4,675			49,671
Less: interest	(13,845		)	(1,051		)	(14,896		)
Present value of lease liabilities	31,151			3,624			34,775
Less: current obligation of lease liabilities	(3,859		)	(121		)	(3,980		)
Total long-term lease liabilities	$	27,292		$	3,503		$	30,795

The future minimum annual lease payments required under the Company’s existing operating lease agreements as of May 26, 2019 prior to the adoption of ASC 842 were as follows:



(In thousands)	Operating Leases
Fiscal year 2020	$	5,056
Fiscal year 2021	4,044
Fiscal year 2022	3,589
Fiscal year 2023	3,350
Fiscal year 2024	3,047
Thereafter	9,335
Total	$	28,421

Rent expense for operating leases, including month to month arrangements was $7.3 million and $6.1 million and for the fiscal years 2019 and 2018, respectively.

The future minimum annual lease payments required under the Company’s existing capital lease agreements as of May 26, 2019 prior to the adoption of ASC 842 were as follows:



(In thousands)	Capital Leases
Fiscal year 2020	$	486
Fiscal year 2021	489
Fiscal year 2022	460
Fiscal year 2023	3,490
Fiscal year 2024	—
Thereafter	—
Total minimum lease payment	4,925
Less: amounts representing interest and taxes	(1,291		)
Total	3,634
Less: current portion included in other accrued liabilities	(102		)
Long-term capital lease obligation	$	3,532

Supplemental cash flow information related to leases are as follows:



	Six Months Ended
(In thousands)	November 24, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,662
Operating cash flows from finance leases	180
Financing cash flows from finance leases	62
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	2,226

Leases