LEASES

Effective

September 30, 2019,

the

first

day of fiscal year

2020,

we adopted ASC

842

using the modified retrospective method as of the adoption date. As a result of electing the modified retrospective approach, we have

not

restated prior year financial statements to conform to the new guidance. Our operating lease portfolio primarily includes real estate, office equipment, and vehicles.

In connection with the Transactions, the Company entered into a lease agreement between BH Media, as Landlord, and the Company, as Tenant, providing for the leasing of

properties and related fixtures (including production equipment) used in the BH Media Newspaper Business (“BH Lease”). The Lease was signed and commenced on

March 16, 2020.

The BH Media Lease requires the Company to pay annual rent of

$8,000,000,

payable in equal monthly payments, as well as all operating costs relating to the properties (including maintenance, repairs, property taxes and insurance). Rent payments will be subject to a Rent Credit (as defined in the Lease) equal to

8.00%

of the net consideration for any leased real estate sold by BH Media during the term of the Lease. In connection with the BH Lease, the Company recognized

$56,226,000

and

$56,226,000

in ROU assets and lease liabilities, respectively, as of

March 16, 2020.

Total lease expense consists of the following:

	13 Weeks Ended		26 Weeks Ended
(Thousands of Dollars)	March 29, 2020		March 29, 2020
Operating lease costs		1,742		2,711
Variable lease costs		295		575
Short-term lease costs		266		319
Total Operating Lease Expense		2,303		3,605

Supplemental cash flow information related to our operating leases was as follows:

(Thousands of Dollars)	March 29, 2020		March 29, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases		2,375		3,266

As a result of the adoption of ASC

842,

September 30, 2019,

we recorded operating lease right-of-use assets of

$10,709,000,

current portion of lease liabilities of

$2,281,000,

and long-term operating lease liabilities of

$8,353,000

in a non-cash operating activity.

As of

March 29, 2020

, maturities of lease liabilities were as follows:


	26 Weeks Ended
(Thousands of Dollars)		March 29, 2020
2020 (six months remaining)		7,048
2021		13,681
2022		11,413
2023		10,698
2024		10,218
Thereafter		50,643
Total lease payments		103,701
Less: interest		(31,794	)
Present value of lease liabilities		71,907

As of the year ended

September 29, 2019

, minimum lease payments during the

five

years ending

September 2024

and thereafter were

$3,403,000,

$2,290,000,

$2,238,000,

$1,637,000,

$1,367,000

and

$4,991,000,

respectively.

Our lease contracts are discounted using the incremental borrowing rate for the Company. We determined the incremental borrowing rate based on a senior secured collateral adjusted yield curve for the Company. This yield curve reflects the estimated rate that would have been paid by the Company to borrow on a collateralized basis over a similar term of the

year lease in a similar economic environment. This rate was reassessed as part of the Transactions and was utilized to re-measure the assumed lease liabilities as well as the BH Lease as of

March 16, 2020.

We will assess this rate annually to determine whether it needs to be updated. The weighted average revolving lease terms and discount rates for all of our operating leases were as follows.

	26 Weeks Ended
	March 29, 2020
Weighted average remaining lease term (years)		9.08
Weighted Average discount rate		8.27	%