| Leases | (9) Leases On January 1, 2019, we adopted ASU 2016-02, Leases, which required us to recognize a right-of-use asset and a corresponding lease liability on our balance sheet for most leases classified as operating leases under previous guidance. Right-of-use assets represent our right to use an underlying asset over the lease term and lease liabilities represent the obligation to make lease payments resulting from the lease agreement. We recognize a right-of-use asset and a lease liability on the effective date of a lease agreement. As of July 4, 2020, our obligations under operating lease arrangements primarily related to the rental of office space, warehouses, freight distribution centers, terminal yards and equipment. Our lease obligations typically do not include options to purchase the leased property, nor do they contain residual value guarantees or material restrictive covenants. Options to extend or terminate an agreement are included in the lease term when it becomes reasonably certain the option will be exercised. As of July 4, 2020, we were not reasonably certain of exercising any renewal or termination options, and as such, no adjustments were made to the right-of-use lease assets or corresponding liabilities. We did not separate lease and nonlease components of contracts for purposes of determining the right-of use lease asset and corresponding liability. Variable lease components that do not depend on an index or a rate, and variable nonlease components were also not contemplated in the calculation of the right-of-use asset and corresponding liability. For facility leases, variable lease costs include the costs of common area maintenance, taxes, and insurance for which we pay the lessors an estimate that is adjusted to actual expense on a quarterly or annual basis depending on the underlying contract terms. For equipment leases, variable lease costs may include additional fees associated with using equipment in excess of estimated amounts. Leases with an initial term of 12 months or less, short-term leases, are not recorded on the balance sheet. Lease expense for short-term and long-term operating leases is recognized on a straight-line basis over the lease term. The following table summarizes our lease costs for the thirteen weeks and twenty-six weeks ended July 4, 2020 and related information (in thousands):
Thirteen weeks ended July 4, 2020
With Affiliates
With Third Parties
Total
Lease cost
Operating lease cost
$
2,434
$
5,840
$
8,274
Short-term lease cost
166
1,074
1,240
Variable lease cost
40
970
1,010
Sublease income
-
(724
)
(724
)
Total lease cost
$
2,640
$
7,160
$
9,800
Twenty-six weeks ended July 4, 2020
With Affiliates
With Third Parties
Total
Lease cost
Operating lease cost
$
5,270
$
11,799
$
17,069
Short-term lease cost
407
2,271
2,678
Variable lease cost
267
1,763
2,030
Sublease income
-
(1,603
)
(1,603
)
Total lease cost
$
5,944
$
14,230
$
20,174
( 9 ) Leases – continued The following table summarizes other lease related information as of and for the twenty-six week period ended July 4, 2020 (in thousands):
With Affiliates
With Third Parties
Total
Other information
Cash paid for amounts included in the measurement of operating leases
$
5,193
$
11,341
$
16,534
Right-of-use asset change due to lease termination
$
-
$
(1,409
)
$
(1,409
)
Right-of-use assets obtained in exchange for new operating lease liabilities
$
1,941
$
15,147
$
17,088
Weighted-average remaining lease term (in years)
6.6
4.7
5.3
Weighted-average discount rate
7.8
%
4.5
%
5.7
% Future minimum lease payments under these operating leases as of July 4, 2020, are as follows (in thousands):
With Affiliates
With Third Parties
Total
Year one
$
8,077
$
20,540
$
28,617
Year two
5,878
12,621
18,499
Year three
3,940
9,555
13,495
Year four
3,575
7,275
10,850
Year five
3,104
6,537
9,641
Thereafter
12,747
9,624
22,371
Total required lease payments
$
37,321
$
66,152
$
103,473
Less amounts representing interest
(15,959
)
Present value of lease liabilities
$
87,514 |
