Leases

12 Months Ended

Sep. 24, 2023

LEASES

We lease certain real estate, vehicles, and equipment. Our leases have remaining lease terms of 1 to 40 years, some of which may include options to extend the leases, and some of which may include options to terminate the leases. The exercise of lease renewal options and terminations are at our sole discretion. The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise.

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 BH Lease commenced on March 16, 2020. The BH Lease requires the Company to pay annual rent of $8.0 million, payable in equal payments, as well as all operating costs relating to the properties (including maintenance, repairs, property taxes and insurance). Rent payments are 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. As of September 24, 2023, the Company has earned monthly rent credits of $0.2 million, making current annual rent of $5.2 million. In connection with the BH Lease, the Company recognized $56.2 million and $56.2 million in right-of-use ("ROU") assets and offsetting lease liabilities as of March 16, 2020.

During the period ended September 25, 2022, the Company permanently vacated office and distribution space related to 14 leases. The space was vacated as some of our locations have transitioned to long-term remote working arrangements and space consolidation. The abandonment of lease space is an indicator of impairment and the Company assessed the lease ROU asset and leasehold improvements for impairment. Estimates of fair value include Level 3 inputs which are subjective in nature and involve uncertainties and matters of significant judgement and are made at a specific point in time. During the period ended September 25, 2022, the Company recorded non-cash impairment losses of $7.8 million for right-of-use assets, which is recorded on the Consolidated Statements of Income (loss) and Comprehensive Income (loss) under the line item assets loss (gain) on sales, impairments and other.

Total lease expense consists of the following:


(Thousands of Dollars)	2023	2022	2021
Operating lease costs	12,688	13,786	14,846
Variable lease costs	1,175	1,201	92
Short-term lease costs	355	217	—
Total Operating Lease Expense	14,218	15,204	14,938

Supplemental cash flow information related to our operating leases is as follows:


(Thousands of Dollars)	2023	2022	2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	13,403	14,325	14,789
Right-of-use assets obtained in exchange for operating lease liabilities	3,855	990	932

As of September 24, 2023, maturities of lease liabilities were as follows:


(Thousands of Dollars)
2024			12,179
2025			10,960
2026			9,369
2027			7,701
2028			6,324
Thereafter			10,609
Total lease payments			57,142
Less: interest			(12,806)
Present value of lease liabilities			44,336

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 in a similar economic environment. The weighted average revolving lease terms and discount rates for all of our operating leases were as follows.


	September 24, 2023
Weighted average remaining lease term (years)	5 years, 7 months, 4 days
Weighted Average discount rate	7.88	%