Leases

9 Months Ended

Oct. 05, 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			40 Weeks Ended
(In thousands)	October 5, 2019			October 5, 2019
Operating lease cost	$	12,626		$	42,272
Short-term lease cost		1,726			5,265
Finance lease cost:
Amortization of assets		824			2,807
Interest on lease liabilities		683			2,378
Sublease income		(902	)		(3,169	)
Total net lease cost	$	14,957		$	49,553

Supplemental balance sheet information related to leases was as follows:

(In thousands)	October 5, 2019
Operating leases:
Operating lease assets	$		272,591

Current portion of operating lease liabilities	$		41,795
Noncurrent operating lease liabilities			273,631
Total operating lease liabilities	$		315,426
Finance leases:
Property and equipment, at cost	$		63,000
Accumulated amortization			(30,262	)
Property and equipment, net	$		32,738

Current portion of finance lease liabilities	$		5,135
Noncurrent finance lease liabilities			32,422
Total finance lease liabilities	$		37,557

Weighted average remaining lease term:
Operating leases		9.0 years
Finance leases		10.2 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		40 Weeks Ended
(In thousands)	October 5, 2019		October 5, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used for operating leases	$	14,229	$	47,155
Operating cash flows used for finance leases		664		2,347
Financing cash flows used for finance leases		1,404		4,864

Leased assets obtained in exchange for lease liabilities:
Total operating lease liabilities		2,891		22,191
Total finance lease liabilities		900		900

The Company’s maturities of lease liabilities under operating and finance leases as of October 5, 2019 are as follows:

	Operating		Finance
(In thousands)	Leases		Leases			Total
2019	$	14,342		2,062			16,404
2020		56,260		7,284			63,544
2021		51,325		5,479			56,805
2022		45,123		4,891			50,014
2023		40,345		4,510			44,855
Thereafter		197,210		32,195			229,405
Total		404,605		56,421			461,027
Less interest		89,179		18,864			108,043
Present value of lease liabilities		315,426		37,557			352,984
Less current portion		41,795		5,135			46,930
Long-term lease liabilities	$	273,631	$	32,422	$		306,054