Note 11 - Commitments and Contingencies

6 Months Ended

Jun. 01, 2019

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

11. Commitments and Contingencies

We are involved in various legal and environmental matters, which arise in the normal course of business. Although the final outcome of these matters cannot be determined, based on the facts presently known, we believe that the final resolution of these matters will not have a material adverse effect on our financial position or future results of operations.

We lease land and buildings that are used in the operation of our Company-owned retail stores as well as in the operation of certain of our licensee-owned stores, and we lease land and buildings at various locations throughout the continental United States for warehousing and distribution hubs used in our retail and logistical services segments. We also lease tractors and trailers used in our logistical services segment, and local delivery trucks used in our retail segment. Our real estate lease terms range from 1 to 15 years and generally have renewal options of between 5 and 15 years. Some store leases contain contingent rental provisions based upon sales volume. Our transportation equipment leases have terms ranging from 2 to 7 years with fixed monthly rental payments plus variable charges based upon mileage. The following schedule shows future minimum lease payments under non-cancellable operating leases with terms in excess of one year as of June 1, 2019:

	Retail Stores		Warehousing & Distribution Centers		Transportation Equipment		All Other		Total
Remainder of fiscal 2019	$	12,308	$	2,893	$	2,240	$	870	$	18,311
Fiscal 2020		24,078		5,440		4,230		1,637		35,385
Fiscal 2021		21,501		4,835		3,060		970		30,366
Fiscal 2022		19,002		4,586		2,151		487		26,226
Fiscal 2023		16,808		3,182		1,263		-		21,253
Fiscal 2024		12,957		1,291		958		-		15,206
Thereafter		39,919		676		354		-		40,949
Total future minimum lease payments	$	146,573	$	22,903	$	14,256	$	3,964	$	187,696

Improvement allowances received from lessors at the inception of a lease are deferred and amortized over the term of the lease. The unamortized balance of such amounts was $8,277 and $6,716 at June 1, 2019 and November 24, 2018, respectively, with the non-current portion of $7,060 and $5,715, respectively, included in other long term liabilities in our condensed consolidated balance sheets and the remaining current portion included in other current liabilities and accrued expenses. At June 1, 2019 and November 24, 2018 prepaid rent of $3,213 and $245, respectively, was included in other current assets in our condensed consolidated balance sheets.

We also have guaranteed certain lease obligations of licensee operators. Lease guarantees range from 1 to 10 years. We were contingently liable under licensee lease obligation guarantees in the amount of $1,886 and $2,021 at June 1, 2019 and November 24, 2018, respectively.

In the event of default by an independent dealer under the guaranteed lease, we believe that the risk of loss is mitigated through a combination of options that include, but are not limited to, arranging for a replacement dealer or liquidating the collateral (primarily inventory). The proceeds of the above options are expected to cover the estimated amount of our future payments under the guarantee obligations, net of recorded reserves. The fair value of lease guarantees (an estimate of the cost to the Company to perform on these guarantees) at June 1, 2019 and November 24, 2018 was not material.