LEASES

12 Months Ended

Dec. 25, 2021

NOTE 11. LEASES

The Company leases retail stores and other facilities, vehicles, and equipment under operating lease agreements. Facility leases typically are for a fixed non-cancellable term with one or more renewal options. In addition to rent payments, the Company is required to pay certain variable lease costs such as real estate taxes, insurance and common-area maintenance on most of the facility leases. For leases beginning in 2019, the Company accounts for lease components (e.g., fixed payments including rent) and non-lease components (e.g., real estate taxes, insurance costs and common-area maintenance costs) as a single lease component. Certain leases contain provisions for additional rent to be paid if sales exceed a specified amount, though such payments have been immaterial during the periods presented, and are recognized as variable lease cost. The Company subleases certain real estate to third parties, consisting mainly of operating leases for space within the retail stores.

The components of lease expense were as follows:

(In millions)	2021			2020			2019
Finance lease cost:
Amortization of right-of-use assets	$	18		$	18		$	17
Interest on lease liabilities		3			4			5
Operating lease cost		350			402			419
Short-term lease cost		4			6			5
Variable lease cost		99			112			118
Sublease income		(2	)		(2	)		(2	)
Total lease cost	$	472		$	540		$	562

Supplemental cash flow information related to leases was as follows:

(In millions)	2021		2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	3	$	4	$	5
Operating cash flows from operating leases		408		447		473
Financing cash flows from finance leases		22		20		21
Right-of-use assets obtained in exchange for new finance lease liabilities		3		29		27
Right-of-use assets obtained in exchange for new operating lease liabilities		127		117		327

Supplemental balance sheets information related to leases was as follows:

	December 25,			December 26,
(In millions, except lease term and discount rate)	2021			2020
Property and equipment, net	$	39		$	59
Operating lease right-of-use assets		936			1,107
Accrued expenses and other current liabilities		304			334
Short-term borrowings and current maturities of long-term debt		17			21
Long-term debt, net of current maturities		35			57
Operating lease liabilities		753			935
Weighted-average remaining lease term – finance leases	4			5
Weighted-average remaining lease term – operating leases	5			5
Weighted-average discount rate – finance leases		5.0	%		5.4	%
Weighted-average discount rate – operating leases		5.8	%		6.4	%

Maturities of lease liabilities as of December 25, 2021 were as follows:

	December 25, 2021
	Operating			Finance
(In millions)	Leases⁽¹⁾			Leases⁽²⁾
2022	$	358		$	19
2023		283			15
2024		199			8
2025		134			7
2026		102			5
Thereafter		140			3
		1,216			57
Less imputed interest		(159	)		(5	)
Total	$	1,057		$	52

Reported as of December 25, 2021
Accrued expenses and other current liabilities	$	304		$	—
Short-term borrowings and current maturities of long-term debt		—			17
Long-term debt, net of current maturities		—			35
Operating lease liabilities		753			—
Total	$	1,057		$	52

(1)	Operating lease payments include $77 million related to options to extend lease terms that are reasonably certain of being exercised.

(2)	Finance lease payments include $1 million related to options to extend lease terms that are reasonably certain of being exercised.