Lease Commitments

9 Months Ended

Oct. 03, 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						39 Weeks Ended
	October 3, 2021			September 27, 2020			October 3, 2021			September 27, 2020
	(In thousands)
Lease expense:
Amortization of right-of-use assets	$	742		$	660		$	2,112		$	2,070
Interest on lease liabilities		66			67			186			234
Finance lease expense		808			727			2,298			2,304
Operating lease expense		20,535			20,382			61,255			60,986
Variable lease expense		4,572			4,595			13,775			10,577
Sublease income		(13	)		(293	)		(90	)		(879	)
Total lease expense	$	25,902		$	25,411		$	77,238		$	72,988

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


	39 Weeks Ended
	October 3, 2021			September 27, 2020
	(In thousands)
Operating cash flows from operating leases	$	64,226		$	57,243
Financing cash flows from finance leases		2,141			2,067
Operating cash flows from finance leases		198			234
Cash paid for amounts included in the measurement of lease liabilities	$	66,565		$	59,544

Right-of-use assets obtained in exchange for new finance lease liabilities	$	7,661		$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	47,325		$	75,025
Weighted-average remaining lease term—finance leases	3.9 years			2.6 years
Weighted-average remaining lease term—operating leases	4.9 years			5.2 years
Weighted-average discount rate—finance leases		3.2	%		4.7	%
Weighted-average discount rate—operating leases		5.4	%		6.2	%

In accordance with ASC 842, maturities of finance and operating lease liabilities as of October 3, 2021 were as follows:


Year Ending:	Finance Leases			Operating Leases
	(In thousands)
2021 (remaining three months)	$	998		$	22,913
2022		3,283			83,566
2023		2,361			66,935
2024		1,543			58,016
2025		1,060			41,385
Thereafter		1,064			55,618
Undiscounted cash flows	$	10,309		$	328,433
Reconciliation of lease liabilities:
Weighted-average remaining lease term	3.9 years			4.9 years
Weighted-average discount rate		3.2	%		5.4	%
Present values	$	9,770		$	288,578
Lease liabilities - current		3,379			76,113
Lease liabilities - long-term		6,391			212,465
Lease liabilities - total	$	9,770		$	288,578
Difference between undiscounted and discounted cash flows	$	539		$	39,855