LEASES

12 Months Ended

Dec. 30, 2023

. 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 retail stores.

The components of lease expense were as follows:


(In millions)	2023			2022			2021
Finance lease cost:
Amortization of right-of-use assets	$	10		$	14		$	18
Interest on lease liabilities		2			2			3
Operating lease cost		325			334			350
Short-term lease cost		9			6			4
Variable lease cost		94			94			99
Sublease income		(1	)		(2	)		(2	)
Total lease cost	$	439		$	448		$	472

Supplemental cash flow information related to leases was as follows:


(In millions)	2023		2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	2	$	2	$	3
Operating cash flows from operating leases		354		370		408
Financing cash flows from finance leases		15		18		22
Right-of-use assets obtained in exchange for new finance lease liabilities		7		4		3
Right-of-use assets obtained in exchange for new operating lease liabilities		375		228		127

Supplemental balance sheets information related to leases was as follows:


	December 30,			December 31,
(In millions, except lease term and discount rate)	2023			2022
Property and equipment, net	$	25		$	29
Operating lease right-of-use assets		983			874
Accrued expenses and other current liabilities		273			281
Short-term borrowings and current maturities of long-term debt		9			14
Long-term debt, net of current maturities		21			24
Operating lease liabilities		789			693
Weighted-average remaining lease term – finance leases	4			3
Weighted-average remaining lease term – operating leases	5			5
Weighted-average discount rate – finance leases		5.0	%		4.9	%
Weighted-average discount rate – operating leases		6.9	%		6.1	%

Maturities of lease liabilities as of December 30, 2023 were as follows:


	December 30, 2023
	Operating			Finance
(In millions)	Leases(1)			Leases(2)
2024	$	331		$	10
2025		270			9
2026		227			7
2027		173			5
2028		111			2
Thereafter		147			—
		1,259			33
Less imputed interest		(197	)		(3	)
Total	$	1,062		$	30

Reported as of December 30, 2023
Accrued expenses and other current liabilities	$	273		$	—
Short-term borrowings and current maturities of long-term debt		—			9
Long-term debt, net of current maturities		—			21
Operating lease liabilities		789			—
Total	$	1,062		$	30

(1)

Operating lease payments include $6 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. There were no legally binding minimum lease payments for leases signed but not yet commenced.