11. Leases

We conduct all of our U.S. operations from leased facilities that include corporate headquarters, warehouse facilities, and 93 store locations. The corporate headquarters, warehouse facilities, and stores are under operating leases that generally expire over the next 1 to 20 years. We also lease computer hardware under operating leases that generally expire over the next few years. In most cases, management expects that in the normal course of business, leases will be renewed or replaced by other leases. The Company also has finance leases at our Elfa segment which are immaterial.

Lease expense on operating leases is recorded on a straight‑line basis over the term of the lease, commencing on the date the Company takes possession of the leased property and is recorded in selling, general and administrative expenses (“SG&A”).

We consider lease payments that cannot be predicted with reasonable certainty upon lease commencement to be variable lease payments, which are recorded as incurred each period and are excluded from our calculation of lease liabilities. Our variable lease payments include lease payments that are based on a percentage of sales.

Upon lease commencement, we recognize the lease liability measured at the present value of the fixed future minimum lease payments. We have elected the practical expedient to not separate lease and non-lease components. Therefore, lease payments included in the measurement of the lease liability include all fixed payments in the lease arrangement. We record a right-of-use asset for an amount equal to the lease liability, increased for any prepaid lease costs and initial direct costs and reduced by any lease incentives. We remeasure the lease liability and right-of-use asset when a change to our future minimum lease payments occurs. Key assumptions and judgments included in the determination of the lease liability include the discount rate applied to present value of the future lease payments and the exercise of renewal options.

Many of our leases contain renewal options. The option periods are generally not included in the lease term used to measure our lease liabilities and right-of-use assets upon commencement as exercise of the options is not reasonably certain. We remeasure the lease liability and right-of-use asset when we are reasonably certain to exercise a renewal option.

Discount Rate

Our leases do not provide information about the rate implicit in the lease. Therefore, we utilize an incremental borrowing rate to calculate the present value of our future lease obligations. The incremental borrowing rate represents the rate of interest we would have to pay on a collateralized borrowing, for an amount equal to the lease payments, over a similar term and in a similar economic environment.

The components of lease costs for the fiscal year ended March 28, 2020 were as follows:


		Fiscal Year Ended
Operating lease costs	$	90,367
Variable lease costs		1,243
Total lease costs	$	91,610

We do not have sublease income and do not recognize lease assets or liabilities for short-term leases, defined as operating leases with initial terms of less than 12 months. Our short-term lease costs were not material for fiscal 2019.

Supplemental cash flow information related to our leases for the fiscal year ended March 28, 2020 were as follows:


		Fiscal Year Ended
Cash paid for amounts included in the measurement of operating lease liabilities	$	90,386
Additions to right-of-use assets	$	52,489

Weighted average remaining operating lease term and incremental borrowing rate as of March 28, 2020 were as follows:


Weighted average remaining lease term (years)	7.1
Weighted average incremental borrowing rate	8.8	%

As of March 28, 2020, future minimum lease payments under our operating lease liabilities were as follows:


	Operating leases (1)
Within 1 year	$	92,694
2 years		81,669
3 years		71,480
4 years		63,538
5 years		47,188
Thereafter		163,530
Total lease payments	$	520,099
Less amount representing interest		(140,339)
Total lease liability	$	379,760
Less current lease liability		(62,476)
Total noncurrent lease liability	$	317,284

(1)

Operating lease payments exclude $11,816 of legally binding minimum lease payments for leases signed but not yet commenced.

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments under non-cancellable operating leases as of March 30, 2019 were as follows:


	Operating leases		Capital leases
Within 1 year	$	89,869	$	203
2 years		86,930		122
3 years		71,295		94
4 years		63,705		13
5 years		55,711		110
Thereafter		167,537		—
Total minimum lease payments	$	535,047	$	542
Less amount representing interest				(48)
Present value of minimum lease payments			$	494