Leases Leases

6 Months Ended

Aug. 29, 2020

7. Leases

We lease certain of the buildings and equipment used in our operations. We determine if an arrangement contains a lease at inception. Currently, all of our lease arrangements are classified as operating leases. We elected the package of practical expedients permitted under the transition guidance in adopting ASC 842, which among other things, allowed us to carry forward our historical lease classification. Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term and lease expense is recognized on a straight-line basis over the lease term. Our leases have remaining lease terms of one to ten years, some of which include renewal options that can extend the lease for up to an additional ten years at our sole discretion. We have made an accounting policy election not to record leases with an original term of 12 months or less on our consolidated balance sheet and such leases are expensed on a straight-line basis over the lease term.

In determining lease asset value, we consider fixed or variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. We use a discount rate for each lease based upon an estimated incremental borrowing rate over a similar term. We have elected the practical expedient to account for lease and non lease components (e.g., common-area maintenance costs) as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We are not a lessor in any transactions.

The components of lease expense were as follows:


	Three Months Ended						Six Months Ended
(In thousands)	August 29, 2020		August 31, 2019		August 29, 2020		August 31, 2019
Operating lease cost	$	3,290	$	3,490	$	6,851	$	6,863
Short-term lease cost	442		496		912		1,179
Variable lease cost	645		667		1,392		1,380

Total lease cost	$	4,377	$	4,653	$	9,155	$	9,422

Other supplemental information related to leases was as follows:


	Six Months Ended
(In thousands except weighted-average data)	August 29, 2020			August 31, 2019

Cash paid for amounts included in the measurement of operating lease liabilities	$	6,562		$	6,791
Lease assets obtained in exchange for new operating lease liabilities	$	6,778		$	8,970
Weighted-average remaining lease term - operating leases	4.9 years			6.0 years
Weighted-average discount rate - operating leases	3.55		%	3.70		%

Future maturities of lease liabilities are as follows:


(In thousands)	August 29, 2020
Remainder of Fiscal 2021	$	6,443
Fiscal 2022	12,081
Fiscal 2023	11,081
Fiscal 2024	9,122
Fiscal 2025	7,307
Fiscal 2026	6,062
Thereafter	8,686
Total lease payments	60,782
Less: Amounts representing interest	(5,185)
Present value of lease liabilities	$	55,597

As of August 29, 2020, we have $5.7 million additional future operating lease commitments for leases that have not yet commenced. Subsequent to the end of the quarter, in September 2020, we sold our McCook, IL building within our LSO segment for $25.1 million. The carrying value of the building was $4.3 million, and we recognized a gain on this sale of approximately $14.8 million, net of taxes and associated transaction costs. We also entered into a separate lease agreement for this facility, which was determined to be an operating lease, and we will have approximately $8.2 million of additional future lease commitments upon commencement of this lease in September 2020.