10. Commitments and Contingencies  Leases  In February 2016, the FASB issued ASU 2016-02 which supersedes ASC 840 and creates a new topic, ASC 842. ASC 842 requires lessees to recognize a right-of-use asset and an operating lease liability on the balance sheet for all operating leases (with the exception of short-term leases, as defined in ASC 842) at the lease commencement date and recognize expenses on the income statement in a similar manner to the legacy guidance in ASC 840. The operating lease liability is measured as the present value of the unpaid lease payments and the right-of-use asset will be derived from the calculation of the operating lease liability.  We adopted the provisions of ASC 842 effective January 27, 2019, using the modified retrospective adoption method, which resulted in an adjustment to opening retained earnings of $98.6 million, net of $32.7 million in deferred taxes. We utilized the simplified transition option available in ASC 842, which allows entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. Related to the adoption of ASC 842, our policy elections were as follows:      Package of practical expedients    We have elected to not reassess whether any expired or existing contracts are or contain leases.  We did not reassess initial direct costs for any existing leases.  All existing operating and capital leases under ASC 840 were recorded as operating and financing leases, respectively, under ASC 842. Separation of lease and non-lease components    We have elected to account for lease and non-lease components as a single component for our entire population of real estate portfolio assets. Short-term leases    We have elected the short-term lease recognition exemption for all applicable classes of underlying assets.  Short-term leases include only those leased assets with a term greater than one month but less than 12 months in duration and expense is recognized on a straight-line basis over the lease term.  Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet.  In addition, ASC 842 eliminated the previous sale-leaseback and build-to-suit lease accounting guidance, which resulted in the derecognition of the following (in thousands):           Balance Sheet  Derecognition as of    Classification  January 27, 2019         Deferred gains on sale-leasebacks  Deferred rent  $ 121,874  Financing obligations (a)  Financing Obligations   35,241  Build-to-suit assets (a)  Property and equipment, net   (22,777)  Deferred tax asset  Noncurrent deferred tax asset   (32,743)  Other  Several   (3,001)  Adjustment to retained earnings  Retained earnings  $ (98,594)  (a) Build-to-suit assets and related financing obligation liabilities that remained on the balance sheet after the end of the construction period.  For leases with terms of 12 months and greater, an asset and liability are initially recorded at an amount equal to the present value of the unpaid lease payments over the lease term. In determining the lease term for each lease, we include options to extend the lease when it is reasonably certain that we will exercise that option. We use the interest rate implicit in the lease, when known, or its estimated incremental borrowing rate, which is derived from information available at the lease commencement date including prevailing financial market conditions, in determining the present value of the unpaid lease payments.  We assess whether a contract contains a lease on its execution date. If the contract contains a lease, lease classification is assessed upon its commencement date under ASC 842. For leases that are determined to qualify for treatment as operating leases, rent expense is recognized on a straight-line basis over the lease term. Leases that are determined to qualify for treatment as finance leases recognize interest expense as determined using the effective interest method with corresponding amortization of the right-of-use assets.  We enter into leases primarily for real estate assets to support our operations in the normal course of business. As of January 25, 2020, our material operating leases consist of our corporate headquarters, distribution centers and the majority of our store properties. We also have two real estate leases for store properties that qualify for treatment as finance leases. Our leases generally have terms of 5 to 20 years , with renewal options that generally range from 5 to 20 years in the aggregate and are subject to escalating rent increases. Our leases may include variable charges at the discretion of the lessor. Certain of our leases include rent escalations based on inflation indexes and/or contingent rental provisions that include a fixed base rent plus an additional percentage of the respective stores sales in excess of stipulated amounts. Operating lease liabilities are calculated using the prevailing index or rate at the commencement of the lease. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.  The components of lease cost were as follows (in thousands):               Fiscal Year Ended       January 25, 2020          Operating lease cost (a)     $ 142,508  Variable lease cost      23,086  Finance lease cost:        Amortization of right-of-use assets      298  Interest on lease liabilities      129  Total lease cost (b)     $ 166,021  (a) Net of an immaterial amount of sublease income. (b) Short-term lease cost for the fiscal year ended January 25, 2020 was immaterial.  The table below presents additional information related to our leases as of January 25, 2020.       Weighted average remaining lease term     Operating leases   12.5 years Finance leases   4.6 years Weighted average discount rate     Operating leases   6.23 % Finance leases   8.28 %  Supplemental disclosures of cash flow information related to leases were as follows (in thousands):              Fiscal Year Ended      January 25, 2020          Cash paid for operating lease liabilities     $ 126,511  Right-of-use assets obtained in exchange for operating lease liabilities     $ 310,818  Cash paid for finance lease liabilities     $ 294   Maturities of lease liabilities were as follows as of January 25, 2020 (in thousands):                         Operating Leases  Finance Leases  Total             2021  $ 143,885  $ 424  $ 144,309  2022   142,382   424   142,806  2023   143,591   390   143,981  2024   143,485   239   143,724  2025   143,862   243   144,105  Thereafter   1,121,991   162   1,122,153  Total lease payments   1,839,196   1,882   1,841,078  Amount representing interest   (578,444)   (349)   (578,793)  Present value of lease liabilities   1,260,752   1,533   1,262,285  Less current obligations   (65,188)   (314)   (65,502)  Long-term lease obligations  $ 1,195,564  $ 1,219  $ 1,196,783   As of January 25, 2020, operating lease payments excluded approximately $173.0 million of legally binding minimum lease payments for leases signed but not yet commenced.  Litigation  We are subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.