Leases
Expenses related to operating leases, amortization of finance lease ROU assets and finance lease interest are included in Cost of sales, Selling general and administrative expense, and Interest income, net in the Consolidated Statements of Income.
The Company’s lease cost consists of the following (in thousands):
| | | | | | | | | | | | | | |
| | 13 Weeks Ended May 30, 2020 | | 52 Weeks Ended May 30, 2020 |
| Operating Lease cost | | $ | 236 | | | $ | 871 | |
| Finance Lease cost | | | | |
| Amortization of right-of-use asset | | $ | 38 | | | $ | 115 | |
| Interest on lease obligations | | $ | 10 | | | $ | 43 | |
| Short term lease cost | | $ | 959 | | | $ | 3,608 | |
Future minimum lease payments under non-cancelable leases are as follows (in thousands):
| | | | | | | | | | | | | | |
| | As of May 30, 2020 | | |
| | Operating Leases | | Finance Leases |
| 2021 | | $ | 930 | | | $ | 239 | |
| 2022 | | 806 | | | 239 | |
| 2023 | | 539 | | | 239 | |
| 2024 | | 380 | | | 218 | |
| 2025 | | 130 | | | — | |
| Thereafter | | 32 | | | — | |
| Total | | 2,817 | | | 935 | |
| Less imputed interest | | (286) | | | (78) | |
| Total | | $ | 2,531 | | | $ | 857 | |
The weighted-average remaining lease term and discount rate for lease liabilities included in our Condensed Consolidated Balance Sheet are as follows:
| | | | | | | | | | | | | | |
| | As of May 30, 2020 | | |
| | Operating Leases | | Finance Leases |
| Weighted-average remaining lease term (years) | | 3.5 | | 3.5 |
| Weighted-average discount rate | | 5.9 | % | | 4.9 | % |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.