Leases

6 Months Ended

Jul. 13, 2019

Note 9 – Leases

A portion of the Company’s retail stores and warehouses operate in leased facilities. The Company also leases the majority of the tractors and trailers within its fleet and certain other assets. Most of the real property leases contain multiple renewal options, which generally range from one to ten years. In those locations in which it is economically feasible to continue to operate, management expects that lease options will be exercised. The terms of certain leases contain provisions requiring payment of percentage rent based on sales and payment of executory costs such as property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premises or, in the case of transportation equipment, provisions requiring payment of variable rent based upon miles driven. Certain properties or portions thereof are subleased to others. As most of the Company’s leases do not provide an implicit discount rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The components of lease expense were as follows:

	12 Weeks Ended			28 Weeks Ended
(In thousands)	July 13, 2019			July 13, 2019
Operating lease cost	$	12,586		$	29,646
Short-term lease cost		1,510			3,539
Finance lease cost
Amortization of assets		853			1,984
Interest on lease liabilities		713			1,695
Sublease income		(932	)		(2,267	)
Total net lease cost	$	14,730		$	34,597

Supplemental balance sheet information related to leases was as follows:

(In thousands)	July 13, 2019
Operating leases:
Operating lease assets	$		274,336

Current portion of operating lease liabilities	$		41,767
Noncurrent operating lease liabilities			276,888
Total operating lease liabilities	$		318,655
Finance leases:
Property and equipment, at cost	$		62,118
Accumulated amortization			(29,371	)
Property and equipment, net	$		32,747

Current portion of finance lease liabilities	$		5,794
Noncurrent finance lease liabilities			32,644
Total finance lease liabilities	$		38,438

Weighted average remaining lease term:
Operating leases		9.2 years
Finance leases		10.1 years

Weighted average discount rate:
Operating leases			5.7	%
Finance leases			8.2	%

Supplemental cash flow and other information related to leases was as follows:

	12 Weeks Ended		28 Weeks Ended
(In thousands)	July 13, 2019		July 13, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	14,144	$	32,926
Operating cash flows used for finance leases		708		1,683
Financing cash flows used for finance leases		1,505		3,461

Leased assets obtained in exchange for lease liabilities:
Total operating lease liabilities		14,691		19,300
Total finance lease liabilities		—		—

The Company’s maturities of lease liabilities under operating and finance leases as of July 13, 2019 are as follows:

	Operating		Finance
(In thousands)	Leases		Leases		Total
2019	$	27,581		4,335	$	31,916
2020		55,754		7,416		63,170
2021		50,482		5,374		55,856
2022		44,140		4,784		48,924
2023		39,689		4,401		44,090
Thereafter		195,885		31,479		227,364
Total		413,531		57,789		471,320
Less interest		94,876		19,351		114,227
Present value of lease liabilities		318,655		38,438		357,093
Less current portion		41,767		5,794		47,561
Long-term lease liabilities	$	276,888	$	32,644	$	309,532