Leases

3 Months Ended

Feb. 01, 2020

In the first quarter of fiscal 2020, the Company adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) (ASU 2016-02) using the modified retrospective approach. Results for the first quarter of fiscal 2020 are presented under ASU 2016-02, while prior period consolidated financial statements have not been adjusted and continue to be presented under the accounting standard in effect at that time. See Note 12, New Accounting Pronouncements of these Notes to Condensed Consolidated Financial Statements for further detail on the adoption of this standard, including the initial adoption values.

The Company enters into operating leases which primarily relate to certain facilities. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. Lease assets represent the Company's right to use underlying assets for the lease term, and lease liabilities represent the obligation to make lease payments over the lease term. At lease commencement, leases are evaluated for classification, and assets and liabilities are recognized based on the present value of lease payments over the lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property. The Company has agreements with lease and non-lease components, which are accounted for as a single lease component. Non-lease components may include real estate taxes, insurance, maintenance, parking and other operating costs. If these costs are variable costs they are not included in the measurement of the right-of-use assets and lease liabilities, but are expensed when the event determining the amount of variable consideration to be paid occurs. The Company’s leases have remaining lease terms of less than one year to approximately ten years, some of which may include options to extend the initial term of the lease. These options are included in determining the initial lease term at lease commencement only if the Company is reasonably certain to exercise the option. Lease costs are recognized on a straight-line basis as lease expense over the lease term. For leases with terms of twelve months or less the Company recognizes the related lease payments as expense either straight-line over the lease term or as incurred depending on whether the lease payments are fixed or variable.

The following table presents supplemental balance sheet information related to our operating leases:


	February 1, 2020
Assets
Operating lease right-of-use assets in Other assets	$	229,279
Liabilities
Operating lease liabilities in Accrued liabilities	$	34,433
Operating lease liabilities in Other non-current liabilities	$	265,995

Details of the Company's operating leases are as follows:


	Three Months Ended
	February 1, 2020
Lease expense	$	10,692

Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows from operating leases	$	11,399
Lease assets obtained in exchange for new lease liabilities	$	4,835
Weighted average remaining lease term	9.4 years
Weighted average discount rate	3.3		%

The following table presents the maturities of our operating lease liabilities as of February 1, 2020:


Fiscal year	Operating Leases
Remainder of 2020	$	33,054
2021	40,485
2022	35,525
2023	32,728
2024	32,364
2025	31,103
Thereafter	146,645
Total future minimum operating lease payments	351,904
Less: imputed interest	(51,476)
Present value of operating lease liabilities	$	300,428

As of February 1, 2020, we have additional leases for office space and equipment, which have not yet commenced, of approximately $16.6 million. These leases will commence during fiscal year 2020, with lease terms of 10 to 25 years.