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LEASES

3 Months Ended

Apr. 04, 2020

The Company's leases consist primarily of retail space, offices, warehouses, distribution centers, equipment and vehicles. The Company determines if an agreement contains a lease at inception based on the Company's right to the economic benefits of the leased assets and its right to direct the use of the leased asset. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset, and ROU liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at the commencement date adjusted for the lease term and lease country to determine the present value of the lease payments.

Some leases include one or more options to renew at the Company's discretion, with renewal terms that can extend the lease from one to ten additional years. The renewal options are not included in the measurement of ROU assets and ROU liabilities unless the Company is reasonably certain to exercise the optional renewal periods. Short-term leases are leases having a term of twelve months or less at inception. The Company does not record a related lease asset or liability for short-term leases. The Company has certain leases containing lease and non-lease components which are accounted for as a single lease component. The Company has certain leases agreements where lease payments are based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation. The variable portion of these lease payments is not included in the Company's lease liabilities. The Company's lease agreements do not contain any significant restrictions or covenants other than those that are customary in such arrangements.

The components of lease expense were as follows (in thousands):



Lease Cost	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Location	For the 14 Weeks Ended April 4, 2020		For the 13 Weeks Ended March 30, 2019
Operating lease cost⁽¹⁾	SG&A	$	28,206	$	30,858
Finance lease cost:
Amortization of ROU assets	SG&A	$	101	$	448
Interest on lease liabilities	Interest expense	$	11	$	9
Short-term lease cost	SG&A	$	201	$	1,700
Variable lease cost	SG&A	$	7,694	$	6,116

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⁽¹⁾Includes sublease income, which was immaterial.

The following table discloses supplemental balance sheet information for the Company’s leases (in thousands):



Leases	Condensed Consolidated Balance Sheets Location	April 4, 2020		December 28, 2019
Assets
Operating	Operating lease ROU assets	$	269,090	$	288,166
Finance	Property, plant and equipment - net of accumulated depreciation of $4,010 and $4,015, respectively	$	5,665	$	5,918

Liabilities
Current:
Operating	Current operating lease liabilities	$	70,839	$	68,838
Finance	Short-term and current portion of long-term debt	$	910	$	1,011
Noncurrent:
Operating	Long-term operating lease liabilities	$	281,097	$	288,689
Finance	Long-term debt	$	1,214	$	1,468

The following table discloses the weighted-average remaining lease term and weighted-average discount rate for the Company's leases:



Lease Term and Discount Rate	April 4, 2020		December 28, 2019
Weighted-average remaining lease term:
Operating leases	6.1 years		6.1 years
Finance leases	2.0 years		2.3 years
Weighted-average discount rate:
Operating leases	14.0	%	13.9	%
Finance leases	1.2	%	1.2	%

Future minimum lease payments by year as of April 4, 2020 were as follows (in thousands):



Fiscal Year	Operating Leases		Finance Leases
2020 (remaining)	$	88,158	$	721
2021	97,604		949
2022	84,329		474
2023	67,061		—
2024	48,842		—
2025	35,351		—
Thereafter	127,316		—
Total lease payments	$	548,661	$	2,144
Less: Interest	196,725		20
Total lease obligations	$	351,936	$	2,124

Future minimum lease payments by year as of December 28, 2019 were as follows (in thousands):



Fiscal Year	Operating Leases		Finance Leases
2020	$	116,778	$	1,042
2021	94,795		978
2022	81,536		488
2023	64,582		—
2024	45,846		—
Thereafter	153,255		—
Total lease payments	$	556,792	$	2,508
Less: Interest	199,265		30
Finance lease obligations	$	357,527	$	2,478

Supplemental cash flow information related to leases was as follows (in thousands):



	For the 14 Weeks Ended April 4, 2020		For the 13 Weeks Ended March 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	30,324	$	20,092
Operating cash flows from finance leases	11		9
Financing cash flows from finance leases	309		236
Leased assets obtained in exchange for new operating lease liabilities	18,284		5,148

As of April 4, 2020, the Company did not have any material operating or finance leases that have been signed but not commenced.

LEASES