Leases

12 Months Ended

Aug. 31, 2019

Note O – Leases

The Company leases some of its retail stores, distribution centers, facilities, land and equipment, including vehicles. Other than vehicle leases, most of the leases are operating leases, which include renewal options made at the Company’s election and provisions for percentage rent based on sales. Rental expense was $332.7 million in fiscal 2019, $315.6 million in fiscal 2018, and $302.9 million in fiscal 2017. Percentage rentals were insignificant.

The Company records rent for all operating leases on a straight-line basis over the lease term, including any reasonably assured renewal periods and the period of time prior to the lease term that the Company is in possession of the leased space for the purpose of installing leasehold improvements. Differences between recorded rent expense and cash payments are recorded as a liability in Accrued expenses and other and Other long-term liabilities in the accompanying Consolidated Balance Sheets, based on the terms of the lease. The deferred rent approximated $159.9 million on August 31, 2019, and $139.6 million on August 25, 2018.

The Company has a fleet of vehicles used for delivery to its commercial customers and stores and travel for members of field management. The majority of these vehicles are held under capital leases. At August 31, 2019, the Company had capital lease assets of $182.0 million, net of accumulated amortization of $81.2 million, and capital lease obligations of $179.9 million, of which $56.2 million is classified as Accrued expenses and other as it represents the current portion of these obligations. At August 25, 2018, the Company had capital lease assets of $156.8 million, net of accumulated amortization of $79.9 million, and capital lease obligations of $154.3 million, of which $52.3 million is classified as Accrued expenses and other as it represents the current portion of these obligations.

Future minimum annual rental commitments under

non-cancelable

operating leases and capital leases were as follows at the end of fiscal 2019:


(in thousands)	Operating Leases		Capital Leases
2020	$	315,424	$	56,246
2021		302,056		51,679
2022		281,287		39,094
2023		252,868		28,401
2024		221,213		7,300
Thereafter		824,244		—

Total minimum payments required	$	2,197,092		182,720

Less: Interest				(2,815	)

Present value of minimum capital lease payments			$	179,905