(7) Leases

The adoption of ASU 2016-02 Leases (Topic 842) had a significant impact on the Company’s Consolidated Balance Sheets, resulting in operating lease right-to-use assets of $202 million and lease liabilities of $211 million. The difference between the operating lease right-to-use assets and lease liabilities represents prepaid and accrued rents, unfavorable lease obligations, favorable lease assets and deferred tenant allowances associated with operating leases as of December 30, 2018 and reclassified against the operating lease right-to-use asset upon adoption.

As of December 30, 2018, the Company leased approximately 53% of its open store facilities under operating leases that expire at various dates through 2033, with the remaining store facilities being owned. These leases generally provide for fixed annual rentals; however, several provide for minimum annual rentals plus variable lease costs related to real estate taxes and insurance as well as contingent rentals based on a percentage of annual sales or increases periodically based on inflation. These variable lease costs are not included in the measurement of the operating lease right-to-use assets or lease liabilities and are charged to the related expense category included in “Operating, general and administrative expenses.” Most of the leases contain multiple renewal options, under which the Company may extend the lease terms from 5 to 20 years. Additionally, the Company has operating leases for certain transportation and other equipment.

The Company leases or subleases space to tenants in owned, vacated and open store facilities. Rental income is recorded when earned as a component of “Operating, general and administrative expenses.”

The following is a schedule of the lease costs included in “Operating, general and administrative expenses” for the thirteen and thirty-nine weeks ended September 28, 2019.


(dollars in thousands)	13 Weeks Ended		39 Weeks Ended
Operating lease cost	$	11,493	$	34,549
Variable lease cost		2,636		8,190
Lease or sublease income		(1,945)		(5,795)
Net lease cost	$	12,184	$	36,944

The following is a schedule by years of the future minimum rental payments required under operating leases and total minimum sublease and lease rental income to be received as of September 28, 2019, inclusive of 12 months from September 28th.


(dollars in thousands)		Leases	Subleases
2019	$	45,907	(4,020)
2020		40,860	(3,519)
2021		34,264	(3,020)
2022		29,164	(2,590)
2023		25,033	(1,987)
Thereafter		66,110	(7,534)
Total Lease Payments	$	241,338	(22,670)
Less: Interest		38,181	-
Present value of lease liabilities		203,157	(22,670)

The following is a schedule of weighted-average remaining lease terms and weighted-average discount rates as of September 28, 2019 and December 30, 2018.


Lease Term and Discount Rate	September 28, 2019	December 30, 2018
Weighted-average remaining lease term	4.36	4.69
Weighted-average discount rate	3.63%	3.84%