Leases

9 Months Ended

Mar. 27, 2022

The Company leases various assets under non-cancellable operating and capital leases. These assets include bowling centers, office space, vehicles, and equipment.

Operating leases: For our operating leases, we recognize rent expense straight-line over the lease term, including rent-free periods. We recorded accrued rent of $26,200 and $26,853 within other long-term liabilities on the consolidated balance sheets as of March 27, 2022 and June 27, 2021, respectively.

In addition to previously received rent concessions in response to the economic effects of the COVID-19 pandemic, in March 2022, the Company received a rent concession related to an operating lease in the form of a rent abatement retroactive to April 1, 2020 for amounts which had been previously recognized as rent expense. We elected to not account for this concession as a modification in accordance with the relief provided by the FASB staff. As a result, we recognized rent abatements of $7,470 ($5,603 allocated to cost of revenues and $1,867 allocated to selling, general and administrative expenses) as a reduction of rent expense during the three and nine months ended March 27, 2022.

Capital leases: For our capital leases, we record interest expense on the obligation and amortize the asset over the lease term. We record a capital lease liability equal to the present value of the minimum lease payments over the lease term discounted using the incremental borrowing rate for that lease. We calculate the current portion of our capital lease obligation as the total payments that are due in the next 12 months that are attributed to principal payments in the capital lease obligation amortization schedule. We had $43,922 in accumulated amortization on property and equipment under capital leases as of March 27, 2022, and $34,609 as of June 27, 2021.

The following table summarizes the Company’s costs for operating and capital leases:


	Three Months Ended				Nine Months Ended
	March 27, 2022		March 28, 2021		March 27, 2022		March 28, 2021
Operating Leases
Rent expense	$	8,041	$	13,969	$	39,979	$	42,669

Capital Leases
Interest expense	9,255		8,722		28,080		26,050
Amortization expense	3,003		3,049		9,313		9,300
Total Capital Lease Cost	$	12,258	$	11,771	$	37,393	$	35,350

The future minimum rent payments under our operating and capital leases as of March 27, 2022 are as follows:


	Operating Leases		Capital Leases

Remainder of 2022	$	16,003	$	11,159
2023	46,450		40,879
2024	45,559		41,954
2025	47,031		42,146
2026	45,090		37,353
Thereafter	566,291		1,030,886
Total Rental Payments:	$	766,424	$	1,204,377

Less imputed interest expense for capital leases:			809,526
Present value:			$	394,851