The Company leases certain store real estate, warehouses, distribution centers, fulfillment centers, office space and equipment. The Company operates in leased facilities in approximately half of its store locations. Lease terms generally range from 10 to 20 years with options to renew for varying terms at the Company’s sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others for periods generally ranging from one to 20 years.

The following table provides supplemental balance sheet classification information related to leases:

(1)

Finance lease assets are recorded net of accumulated amortization of $414 and $321 as of January 29, 2022 and January 30, 2021.

The following table provides the components of lease cost:


		Year-To-Date		Year-To-Date
Lease Cost	Classification		January 29, 2022	January 30, 2021
Operating lease cost⁽¹⁾	Rent Expense	$	954	$	981
Sublease and other rental income	Rent Expense		(109)		(107)
Finance lease cost
Amortization of leased assets	Depreciation and Amortization		95		55
Interest on lease liabilities	Interest Expense		52		45

Net lease cost		$	992	$	974

(1)

Includes short-term leases and variable lease costs, which are immaterial.

Maturities of operating and finance lease liabilities are listed below. Amounts in the table include options to extend lease terms that are reasonably certain of being exercised.


	Operating		Finance
	Leases		Leases		Total
2022	$	920	$	159	$	1,079
2023		862		158		1,020
2024		791		156		947
2025		717		152		869
2026		664		152		816
Thereafter		5,961		1,323		7,284

Total lease payments		9,915		2,100	$	12,015

Less amount representing interest		2,839		481

Present value of lease liabilities⁽¹⁾	$	7,076	$	1,619

(1)

Includes the current portion of $650 for operating leases and $104 for finance leases.

Total future minimum rentals under non-cancellable subleases at January 29, 2022 were $256.

The following table provides the weighted-average lease term and discount rate for operating and finance leases:



	January 29, 2022		January 30, 2021
Weighted-average remaining lease term (years)
Operating leases	14.9		15.3
Finance leases	14.7		16.2
Weighted-average discount rate
Operating leases	4.1	%	4.2	%
Finance leases	3.7	%	4.4	%

The following table provides supplemental cash flow information related to leases:


	Year-To-Date		Year-To-Date
	January 29, 2022		January 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	897	$	849
Operating cash flows from finance leases		52		45
Financing cash flows from finance leases		127		37
Leased assets obtained in exchange for new operating lease liabilities		669		679
Leased assets obtained in exchange for new finance lease liabilities		753		190
Net gain recognized from sale and leaseback transactions⁽¹⁾		35		39
Impairment of operating lease assets		8		4
Impairment of finance lease assets		4		2

(1)

In 2021, the Company entered into sale leaseback transactions related to seven properties, which resulted in total proceeds of $79. In 2020, the Company entered into sale leaseback transactions related to seven properties, which resulted in total proceeds of $78.

On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International Holdings Limited and Ocado Group plc (“Ocado”), which has since been amended. Under this agreement, Ocado will partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its distribution networks. The Company opened its first three Kroger Delivery customer fulfillment centers in Monroe, Ohio, Groveland, Florida and Forest Park, Georgia. The Company determined the arrangement with Ocado contains a lease of the robotic equipment used to fulfill customer orders. As a result, the Company established a finance lease when each facility began fulfilling orders to customers and used its 10-year incremental borrowing rate to calculate the lease liability. The base term of each lease is 10 years with options to renew at the Company’s sole discretion. The Company elected to combine the lease and non-lease elements in the contract. As a result, it will account for all payments to Ocado as lease payments. In 2021, the Company recorded finance lease assets of $401 and finance lease liabilities of $372 related to these location openings.