Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.21.2
Leases
 6 Months Ended
Jun. 26, 2021
Leases [Abstract]  
Finance Leases
11. Leases

Lessee

The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. The Company leases certain distribution center locations, vehicles, forklifts, computer equipment, and its corporate headquarters with expiration dates through 2032. Certain lease arrangements include escalating rent payments and options to extend the lease term. Expected lease terms include these options to extend or terminate the lease when it is reasonably certain the Company will exercise the option. The Company's leasing arrangements do not contain material residual value guarantees nor material restrictive covenants.
The components of operating and finance lease cost for the thirteen and twenty-six weeks ended June 26, 2021 and thirteen and twenty-six weeks ended June 27, 2020 were as follows:
Thirteen Weeks Ended
June 26, 2021		 Twenty-six Weeks Ended
June 26, 2021		 Thirteen Weeks Ended
June 27, 2020		 Twenty-six Weeks Ended
June 27, 2020
Operating lease cost $ 5,149  $ 10,243  $ 4,547  $ 9,294 
Short term lease costs 1,100  1,986  528  1,049 
Variable lease costs 453  757  491  671 
Finance lease cost:
Amortization of right of use assets 224  438  200  402 
Interest on lease liabilities 32  67  36  72 


Rent expense totaled $6,702 and $12,986 in the thirteen and twenty-six weeks ended June 26, 2021, respectively, and $5,566 and $11,014 in the thirteen and twenty-six weeks ended June 27, 2020, respectively. Rent expense includes operating lease cost as well as expense for non-lease components such as common area maintenance, real estate taxes, real estate insurance, variable costs related to our leased vehicles and also short-term rental expenses.

The implicit rate is not determinable in most of the Company’s leases, as such management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The weighted average remaining lease terms and discount rates for all of our operating and finance leases were as follows as of June 26, 2021 and December 26, 2020:

June 26, 2021 December 26, 2020
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted average remaining lease term 7.09 2.47 7.19 2.61
Weighted average discount rate 8.20% 7.15% 8.28% 7.14%


Supplemental balance sheet information related to the Company's finance leases was as follows as of June 26, 2021 and December 26, 2020:
June 26, 2021 December 26, 2020
Finance lease assets, net, included in property plant and equipment $ 1,783  $ 1,919 
Current portion of long-term debt 833  872 
Long-term debt, less current portion 940  1,172 
Total principal payable on finance leases 1,773  2,044 

Supplemental cash flow information related to the Company's operating leases was as follows for the twenty-six weeks ended June 26, 2021 and twenty-six weeks ended June 27, 2020:

Twenty-six Weeks Ended
June 26, 2021		 Twenty-six Weeks Ended
June 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases $ 9,778  $ 8,956 
Operating cash outflow from finance leases 68  72 
Financing cash outflow from finance leases 460  411 
Maturities of our lease liabilities for all operating and finance leases are as follows as of June 26, 2021:
Operating Leases Finance Leases
Less than one year $ 18,542  $ 937 
1 to 2 years 17,126  628 
2 to 3 years 15,665  373 
3 to 4 years 15,473  5 
4 to 5 years 14,647  — 
After 5 years 37,231  — 
Total future minimum rental commitments 118,684  1,943 
Less - amounts representing interest (28,642) (170)
Present value of lease liabilities $ 90,042  $ 1,773 
Lessor

The Company has certain arrangements for key duplication equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material.
Operating Leases
11. Leases

Lessee

The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. The Company leases certain distribution center locations, vehicles, forklifts, computer equipment, and its corporate headquarters with expiration dates through 2032. Certain lease arrangements include escalating rent payments and options to extend the lease term. Expected lease terms include these options to extend or terminate the lease when it is reasonably certain the Company will exercise the option. The Company's leasing arrangements do not contain material residual value guarantees nor material restrictive covenants.
The components of operating and finance lease cost for the thirteen and twenty-six weeks ended June 26, 2021 and thirteen and twenty-six weeks ended June 27, 2020 were as follows:
Thirteen Weeks Ended
June 26, 2021		 Twenty-six Weeks Ended
June 26, 2021		 Thirteen Weeks Ended
June 27, 2020		 Twenty-six Weeks Ended
June 27, 2020
Operating lease cost $ 5,149  $ 10,243  $ 4,547  $ 9,294 
Short term lease costs 1,100  1,986  528  1,049 
Variable lease costs 453  757  491  671 
Finance lease cost:
Amortization of right of use assets 224  438  200  402 
Interest on lease liabilities 32  67  36  72 


Rent expense totaled $6,702 and $12,986 in the thirteen and twenty-six weeks ended June 26, 2021, respectively, and $5,566 and $11,014 in the thirteen and twenty-six weeks ended June 27, 2020, respectively. Rent expense includes operating lease cost as well as expense for non-lease components such as common area maintenance, real estate taxes, real estate insurance, variable costs related to our leased vehicles and also short-term rental expenses.

The implicit rate is not determinable in most of the Company’s leases, as such management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The weighted average remaining lease terms and discount rates for all of our operating and finance leases were as follows as of June 26, 2021 and December 26, 2020:

June 26, 2021 December 26, 2020
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted average remaining lease term 7.09 2.47 7.19 2.61
Weighted average discount rate 8.20% 7.15% 8.28% 7.14%


Supplemental balance sheet information related to the Company's finance leases was as follows as of June 26, 2021 and December 26, 2020:
June 26, 2021 December 26, 2020
Finance lease assets, net, included in property plant and equipment $ 1,783  $ 1,919 
Current portion of long-term debt 833  872 
Long-term debt, less current portion 940  1,172 
Total principal payable on finance leases 1,773  2,044 

Supplemental cash flow information related to the Company's operating leases was as follows for the twenty-six weeks ended June 26, 2021 and twenty-six weeks ended June 27, 2020:

Twenty-six Weeks Ended
June 26, 2021		 Twenty-six Weeks Ended
June 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases $ 9,778  $ 8,956 
Operating cash outflow from finance leases 68  72 
Financing cash outflow from finance leases 460  411 
Maturities of our lease liabilities for all operating and finance leases are as follows as of June 26, 2021:
Operating Leases Finance Leases
Less than one year $ 18,542  $ 937 
1 to 2 years 17,126  628 
2 to 3 years 15,665  373 
3 to 4 years 15,473  5 
4 to 5 years 14,647  — 
After 5 years 37,231  — 
Total future minimum rental commitments 118,684  1,943 
Less - amounts representing interest (28,642) (170)
Present value of lease liabilities $ 90,042  $ 1,773 
Lessor

The Company has certain arrangements for key duplication equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material.