XML 34 R17.htm IDEA: XBRL DOCUMENT

Lease Obligations

12 Months Ended

Dec. 31, 2022

10. Lease Obligations

The Company leases most of the properties for its retail locations through 241 operating leases and 10 finance leases. The Company also leases billboards and certain of its equipment. The related operating lease assets and finance lease assets are included in the operating lease assets and property and equipment, respectively, in the accompanying consolidated balance sheets.

As of December 31, 2022 and 2021, finance lease assets of $88.1 million and $75.7 million, respectively, were included in property and equipment, net in the accompanying consolidated balance sheets.

The following presents certain information related to the costs for leases (in thousands):


	Year Ended December 31,
	2022		2021
Operating lease cost	$	113,411	$	120,096
Finance lease cost:
Amortization of finance lease assets		11,931		6,016
Interest on finance lease liabilities		5,005		2,353
Short-term lease cost		1,880		1,958
Variable lease cost		23,607		23,512
Sublease income		(1,713)		(1,915)
Net lease costs	$	154,121	$	152,020

The following presents supplemental cash flow information related to leases (in thousands):


	Year Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	114,176	$	121,394
Operating cash flows for finance leases		4,928		2,287
Financing cash flows for finance leases		5,977		2,923
Lease assets obtained in exchange for lease liabilities:
New, remeasured and terminated operating leases	$	52,698	$	44,041
New, remeasured and terminated finance leases		24,440		51,920

The following presents other information related to leases:


	December 31, 2022
Weighted average remaining lease term:
Operating leases	11.8	years
Financing leases	15.4	years
Weighted average discount rate:
Operating leases	6.9	%
Financing leases	5.7	%

The following reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the lease liabilities in the accompanying consolidated balance sheet as of December 31, 2022 (in thousands):


	Operating		Finance
	Leases		Leases
2023	$	115,455	$	10,831
2024		115,031		10,566
2025		111,757		9,694
2026		104,745		9,612
2027		95,811		9,059
Thereafter		679,905		106,006
Total lease payments		1,222,704		155,768
Less: Imputed interest		(396,124)		(51,308)
Total lease obligations		826,580		104,460
Less: current portion		(61,745)		(10,244)
Noncurrent lease obligations	$	764,835	$	94,216

Sale-Leaseback Arrangement Recorded as Financing Transaction

On February 8, 2022, FRHP Lincolnshire, LLC sold three properties for a total sale price of $28.0 million. Concurrent with the sale of these properties, the Company entered into three separate twenty-year lease agreements, whereby the Company will lease back the properties from the acquiring company. Under each lease agreement, FR has four consecutive options to extend the lease term for additional periods of five years for each option. This transaction is accounted for as a financing transaction. The Company recorded a liability for the amount received, will continue to depreciate the non-land portion of the assets, and has imputed an interest rate so that the net carrying amount of the financial liability and remaining non-land assets will be zero at the end of the initial lease terms. The financial liability is included in other long-term liabilities in the condensed consolidated balance sheet as of December 31, 2022.