XML 37 R26.htm IDEA: XBRL DOCUMENT v3.20.2
Leases (Tables)
 9 Months Ended
Sep. 26, 2020
Leases [Abstract]  
Schedule of Lease Type and Classification On Balance Sheet
In thousandsAs of
September 26, 2020		As of
December 28, 2019
TypeClassification
ASSETS
Finance
Property and equipment, net (a)
$25,537 $28,128 
Operating
Right of use assets (b)
335,860 348,090 
Total leased assets$361,397 $376,218 
LIABILITIES
Current Liabilities:
FinanceCurrent maturities of long-term debt and finance lease obligations$3,537 $3,259 
Operating
Current operating lease obligations (c)
57,036 51,937 
Other non-current liabilities:
FinanceLong-term debt and finance lease obligations, less current portion and debt discount28,073 30,037 
OperatingNon-current operating lease obligations320,155 331,769 
Total lease liabilities$408,801 $417,002 
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the net present value of minimum lease payments. We used the incremental borrowing rate on December 30, 2018, for operating leases that commenced prior to that date.
_________
(a) Finance lease assets are recorded net of accumulated amortization of $11.6 million and $8.3 million as of September 26, 2020 and December 28, 2019, respectively.
(b) TIA of $34.9 million and $35.2 million are treated as reductions of lease payments used to measure ROU assets as of September 26, 2020 and December 28, 2019, respectively. Deferred rent of $17.0 million and $15.0 million are treated as reductions of lease payments used to measure ROU assets as of September 26, 2020 and December 28, 2019, respectively.
(c) Current operating lease liabilities are measured net of TIA receivables of $3.9 million and $5.9 million as of September 26, 2020 and December 28, 2019, respectively
Schedule of Lease Cost
Three Months EndedNine Months Ended
In thousandsSeptember 26, 2020September 28, 2019September 26, 2020September 28, 2019
Operating lease cost
Fixed lease cost (a)
$19,473 $18,542 $57,885 $54,955 
Variable lease cost (b)
7,203 6,745 20,369 19,803 
Sublease income(c)
(896)(965)(1,778)(2,881)
Finance lease cost
Amortization of finance lease assets1,143 1,176 3,424 3,231 
Interest expense, net:
Interest on finance lease liabilities826 903 2,550 2,689 
Net lease cost$27,749 $26,401 $82,450 $77,797 
(a) Includes short-term leases, which are immaterial.
(b) Includes costs for insurance, real estate taxes and common area maintenance expenses, which are variable, as are lease costs above minimum thresholds for Fred Meyer stores and lease costs for Military stores.
(c) Income from sub-leasing of stores includes rental income from operating lease properties to ophthalmologists and optometrists who are independent contractors.
Schedule of Lease Terms and Discount Rate
Lease Term and Discount RateAs of
September 26, 2020		As of
December 28, 2019
Weighted average remaining lease term (months)
Operating leases7882
Finance leases8388
Weighted average discount rate (a)
Operating leases4.7 %4.6 %
Finance leases (b)
12.5 %13.1 %
(a) The discount rate used to determine the lease assets and lease liabilities was derived upon considering (i) incremental borrowing rates on our term loan and revolving credit facility; (ii) fixed rates we pay on our interest rate swaps; (iii) LIBOR margins for issuers of similar credit rating; and (iv) effect of collateralization. As a majority of our leases are five-year and 10-year leases, we determined a lease discount rate for such tenors and determined this discount rate is reasonable for leases that were entered into during the period.
(b) The discount rate on finance leases is higher than operating leases because the present value of minimum lease payments was higher than the fair value of leased properties for certain leases entered into prior to adoption of ASC 842. The discount rate differential for those leases is not material to our results of operations.
Schedule of Operating Lease Cash Flows
In thousands
Nine Months Ended September 26, 2020
Nine Months Ended September 28, 2019
Other Information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows - operating leases$53,816 $55,817 
Schedule of Maturity for Operating Lease Liabilities
The following table summarizes the maturity of our lease liabilities as of September 26, 2020:
In thousands
Operating Leases (a)
Finance Leases (b)
Fiscal Year
2020$9,313 $1,358 
202182,019 7,280 
202274,613 7,215 
202366,867 6,241 
202457,690 4,673 
Thereafter151,914 16,459 
Total lease liabilities442,416 43,226 
Less: Interest65,225 11,616 
Present value of lease liabilities(c)
$377,191 $31,610 
(a) Operating lease payments include $63.0 million related to options to extend lease terms that are reasonably certain of being exercised.
(b) Finance lease payments include $1.7 million related to options to extend lease terms that are reasonably certain of being exercised.
(c) The present value of lease liabilities excludes $29.2 million of legally binding minimum lease payments for leases signed but not yet commenced.
Schedule of Maturity for Finance Lease Liabilities
The following table summarizes the maturity of our lease liabilities as of September 26, 2020:
In thousands
Operating Leases (a)
Finance Leases (b)
Fiscal Year
2020$9,313 $1,358 
202182,019 7,280 
202274,613 7,215 
202366,867 6,241 
202457,690 4,673 
Thereafter151,914 16,459 
Total lease liabilities442,416 43,226 
Less: Interest65,225 11,616 
Present value of lease liabilities(c)
$377,191 $31,610 
(a) Operating lease payments include $63.0 million related to options to extend lease terms that are reasonably certain of being exercised.
(b) Finance lease payments include $1.7 million related to options to extend lease terms that are reasonably certain of being exercised.
(c) The present value of lease liabilities excludes $29.2 million of legally binding minimum lease payments for leases signed but not yet commenced.