With the exception of one store location, all of the Company’s store locations operate out of leased facilities. The Company’s store location leases generally have initial terms of 10 years with renewal options for up to 25 years. The Company leases three distribution centers located in West Jefferson, Ohio; Opelika, Alabama; and Visalia, California. The initial term of the West Jefferson, Ohio lease expires in June 2028 and the Company has renewal options for up to an additional 18 years. The initial term of the Opelika, Alabama lease expires in June 2041 and the Company has renewal options for up to an additional 20 years. The Visalia distribution center consists of two facilities with separate leases. The initial term of the first lease expires in October 2026, and the Company has renewal options for up to an additional 40 years. The second lease expires in May 2024 and has no renewal options. The Company also leases certain computer and store equipment, with lease terms that are generally five years or less. The Company generally has lease arrangements that have minimum lease payments. Certain of the Company’s leased store locations have variable payments based upon actual costs of common area maintenance, real estate taxes and property and liability insurance. In addition, some of the Company’s leased store locations have provisions for variable payments based upon a specified percentage of defined sales volume or dependent on an existing index or rate, such as the consumer price index or the prime interest rate. Also, some of the Company’s leases contain escalation clauses and provide for contingent rents based on a percent of sales in excess of defined minimums.

As most of the Company’s leases include one or more options to renew and extend the lease term, the exercise of lease renewal options is at the Company’s sole discretion. Generally, a renewal option is not deemed to be reasonably certain to be exercised until such option is legally executed. The Company’s store location leases do not include purchase options or residual value guarantees on the leased property. The depreciable life of leasehold improvements are limited by the expected lease term.

Due to the large number of temporary store closures as a result of the COVID-19 pandemic during fiscal year 2021, the Company negotiated with landlords for rent concessions, either in the form of rent abatement (meaning no rent due for select months) or rent deferral (meaning rent payments are delayed until a future period). The majority of the delayed rent payments were made during fiscal year 2022. As a result of these rent concessions, the Company has adjusted its operating lease liabilities on the accompanying Consolidated Balance Sheets.

A majority of the Company’s leases are classified as operating leases and the associated assets and liabilities are presented as separate lines on the Consolidated Balance Sheets. Operating lease assets and operating lease liabilities are recognized at the date the leased property is delivered to the Company based on the present value of the remaining future minimum lease payments. Additional information related to the Company’s operating leases is as follows:


	Fiscal 2022			Fiscal 2021
	(Dollars in millions)
Cash paid for amounts included in the measurement of operating lease liabilities (a)	$	246.7		$	195.2
Operating lease assets obtained in exchange for new operating lease liabilities	$	120.3		$	282.3
Operating lease cost (b)	$	217.5		$	212.2
Variable lease cost (b)	$	59.5		$	59.0
Weighted-average remaining lease term	6.11 years			5.91 years
Weighted-average discount rate		5.91	%		5.80	%

(a)

Reflected as operating cash outflows in the accompanying Consolidated Statements of Cash Flows

(b)

Reflected as SG&A expenses in the accompanying Consolidated Statements of Comprehensive Income (Loss)

The Company has a small number of leases classified as finance leases which are presented in the Consolidated Balance Sheets as follows:


	Classification	January 29, 2022		January 30, 2021
		(Dollars in millions)
Assets:
Finance lease assets, net	Property, equipment and leasehold improvements, net	$	15.2	$	12.1
Liabilities:
Current portion of finance lease liabilities	Accrued expenses		9.2		5.6
Long-term portion of finance lease liabilities	Other long-term liabilities		7.8		7.2

In fiscal 2022 and fiscal 2021, the Company incurred $8.8 million and $4.3 million, respectively, of finance lease amortization expense which is presented as depreciation and amortization within the accompanying Consolidated Statements of Comprehensive Income (Loss). In fiscal 2022 and fiscal 2021, the Company incurred $0.7 million and $0.4 million, respectively, of finance lease interest expense which is presented as interest expense, net within the accompanying Consolidated Statements of Comprehensive Income (Loss).

The following is a schedule of future minimum rental payments under non-cancelable operating and financing leases as of January 29, 2022:


	Future Minimum Rental Payments
Fiscal Year:	Operating Leases (1)			Finance Leases (2)			Total
	(Dollars in millions)
2023	$	221.6		$	9.7		$	231.3
2024		214.3			6.5			220.8
2025		178.9			1.4			180.3
2026		144.2			—			144.2
2027		105.9			—			105.9
Thereafter		232.5			—			232.5
Total lease payments	$	1,097.4		$	17.6		$	1,115.0
Less: imputed interest		(190.6	)		(0.6	)		(191.2	)
Present value of lease liabilities	$	906.8		$	17.0		$	923.8

(1)

Operating lease payments do not include leases entered in to but not commenced during fiscal year 2022. We committed to approximately twenty leases to commence in fiscal year 2023 with average terms of 10 years and future minimum lease payments of approximately $76.7 million.

(2)

Finance lease payments do not include leases entered in to but not commenced during fiscal year 2022. We committed to two leases to commence in fiscal year 2023 with terms of 5 years and future minimum lease payments of approximately $11.6 million.