Lease Commitments

3 Months Ended

Apr. 04, 2021

(5)	Lease Commitments

The Company has operating and finance leases for the Company’s retail store facilities, distribution center, corporate offices, information technology hardware and distribution center delivery tractors and equipment, and accounts for these leases in accordance with ASC 842.

Certain of the leases for the Company’s retail store facilities provide for variable payments for property taxes, insurance, common area maintenance payments related to triple net leases, rental payments based on future sales volumes at the leased location, as well as certain equipment sales taxes, licenses, fees and repairs, which are not measurable at the inception of the lease, or rental payments that are adjusted periodically for inflation. The Company recognizes variable lease expense for these leases in the period incurred which, for contingent rent, begins in the period in which it becomes probable that the specified target that triggers the variable lease payments will be achieved. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In accordance with ASC 842, the components of lease expense were as follows:

	13 Weeks Ended
	April 4, 2021			March 29, 2020
	(In thousands)
Lease expense:
Amortization of right-of-use assets	$	649		$	722
Interest on lease liabilities		59			89
Finance lease expense		708			811
Operating lease expense		20,336			20,287
Variable lease expense		4,492			4,124
Sublease income		(78	)		(293	)
Total lease expense	$	25,458		$	24,929

In accordance with ASC 842, other information related to leases was as follows:

	13 Weeks Ended
	April 4, 2021			March 29, 2020
	(In thousands)
Operating cash flows from operating leases	$	22,145		$	20,742
Operating cash flows from finance leases		60			112
Financing cash flows from finance leases		931			951
Cash paid for amounts included in the measurement of lease liabilities	$	23,136		$	21,805

Right-of-use assets obtained in exchange for new finance lease liabilities	$	3,334		$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	9,446		$	23,282
Weighted-average remaining lease term—finance leases	3.5 years			3.0 years
Weighted-average remaining lease term—operating leases	4.9 years			5.2 years
Weighted-average discount rate—finance leases		3.7	%		4.7	%
Weighted-average discount rate—operating leases		5.9	%		6.1	%

In accordance with ASC 842, maturities of finance and operating lease liabilities as of April 4, 2021 were as follows:

Year Ending:	Finance Leases			Operating Leases
	(In thousands)
2021 (remaining nine months)	$	1,898		$	64,078
2022		2,451			75,954
2023		1,599			59,910
2024		711			51,230
2025		341			34,803
Thereafter		388			41,831
Undiscounted cash flows	$	7,388		$	327,806
Reconciliation of lease liabilities:
Weighted-average remaining lease term	3.5 years			4.9 years
Weighted-average discount rate		3.7	%		5.9	%
Present values	$	6,996		$	284,087
Lease liabilities - current		2,664			73,196
Lease liabilities - long-term		4,332			210,891
Lease liabilities - total	$	6,996		$	284,087
Difference between undiscounted and discounted cash flows	$	392		$	43,719