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Note 6 - Leases | 6 Months Ended
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Mar. 29, 2020
Notes to Financial Statements |
Lessee, Operating Leases [Text Block] |
6 | LEASES
Effective September 30, 2019, the first day of fiscal year 2020, we adopted ASC 842 using the modified retrospective method as of the adoption date. As a result of electing the modified retrospective approach, we have not restated prior year financial statements to conform to the new guidance. Our operating lease portfolio primarily includes real estate, office equipment, and vehicles. In connection with the Transactions, the Company entered into a lease agreement between BH Media, as Landlord, and the Company, as Tenant, providing for the leasing of 68 properties and related fixtures (including production equipment) used in the BH Media Newspaper Business (“BH Lease”). The Lease was signed and commenced on March 16, 2020. The BH Media Lease requires the Company to pay annual rent of $8,000,000, payable in equal monthly payments, as well as all operating costs relating to the properties (including maintenance, repairs, property taxes and insurance). Rent payments will be subject to a Rent Credit (as defined in the Lease) equal to 8.00% of the net consideration for any leased real estate sold by BH Media during the term of the Lease. In connection with the BH Lease, the Company recognized $56,226,000 and $56,226,000 in ROU assets and lease liabilities, respectively, as of March 16, 2020. Total lease expense consists of the following:
|  | 13 Weeks Ended |  |  | 26 Weeks Ended |
(Thousands of Dollars) |  | March 29, 2020 |  |  | March 29, 2020 |
Operating lease costs |  |  | 1,742 |  |  |  | 2,711 |
Variable lease costs |  |  | 295 |  |  |  | 575 |
Short-term lease costs |  |  | 266 |  |  |  | 319 |
Total Operating Lease Expense |  |  | 2,303 |  |  |  | 3,605 |
Supplemental cash flow information related to our operating leases was as follows:
(Thousands of Dollars) |  | March 29, 2020 |  |  | March 29, 2020 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash outflow from operating leases |  |  | 2,375 |  |  |  | 3,266 |
As a result of the adoption of ASC 842, on September 30, 2019, we recorded operating lease right-of-use assets of $10,709,000, current portion of lease liabilities of $2,281,000, and long-term operating lease liabilities of $8,353,000 in a non-cash operating activity. As of March 29, 2020 , maturities of lease liabilities were as follows:
|  | 26 Weeks Ended |
(Thousands of Dollars) |  |  | March 29, 2020 |
2020 (six months remaining) |  |  | 7,048 |
2021 |  |  | 13,681 |
2022 |  |  | 11,413 |
2023 |  |  | 10,698 |
2024 |  |  | 10,218 |
Thereafter |  |  | 50,643 |
Total lease payments |  |  | 103,701 |
Less: interest |  |  | (31,794 | )
Present value of lease liabilities |  |  | 71,907 |
As of the year ended September 29, 2019 , minimum lease payments during the five years ending September 2024 and thereafter were $3,403,000, $2,290,000, $2,238,000, $1,637,000, $1,367,000 and $4,991,000, respectively. Our lease contracts are discounted using the incremental borrowing rate for the Company. We determined the incremental borrowing rate based on a senior secured collateral adjusted yield curve for the Company. This yield curve reflects the estimated rate that would have been paid by the Company to borrow on a collateralized basis over a similar term of the 5 year lease in a similar economic environment. This rate was reassessed as part of the Transactions and was utilized to re-measure the assumed lease liabilities as well as the BH Lease as of March 16, 2020. We will assess this rate annually to determine whether it needs to be updated. The weighted average revolving lease terms and discount rates for all of our operating leases were as follows.
|  | 26 Weeks Ended |
|  | March 29, 2020 |
Weighted average remaining lease term (years) |  |  | 9.08 |
Weighted Average discount rate |  |  | 8.27 | %

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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