Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.20.1
Leases
3 Months Ended
Mar. 28, 2020
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 weeks ended March 28, 2020 and thirteen weeks ended March 30, 2019 were as follows:

 
 
Thirteen Weeks Ended
March 28, 2020
 
Thirteen Weeks Ended
March 30, 2019
Operating lease cost
 
$
4,747

 
$
4,723

Short term lease costs
 
520

 
1,233

Variable lease costs
 
181

 
188

Finance lease cost:
 
 
 
 
Amortization of right of use assets
 
202

 
92

Interest on lease liabilities
 
36

 
15




Rent expense totaled $5,448 and $6,144 in the thirteen weeks ended March 28, 2020 and thirteen weeks ended March 30, 2019, 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 & finance leases were as follows as of March 28, 2020 and December 28, 2019:

 
 
March 28, 2020
 
December 28, 2019
 
 
Operating Leases
 
Finance Leases
 
Operating Leases
 
Finance Leases
Weighted average remaining lease term
 
7.81

 
3.18

 
7.88

 
3.46

Weighted average discount rate
 
7.83
%
 
6.44
%
 
7.81
%
 
6.49
%


Supplemental balance sheet information related to the Company's finance leases was as follows as of March 28, 2020 and December 28, 2019:
 
 
March 28, 2020
 
December 28, 2019
Finance lease assets, net, included in property plant and equipment
 
$
2,057

 
$
2,101

 
 
 
 
 
Current portion of long-term debt
 
779

 
749

Long-term debt, less current portion
 
1,434

 
1,526

Total principal payable on finance leases
 
2,213

 
2,275



Supplemental cash flow information related to the Company's operating leases was as follows for the thirteen weeks ended March 28, 2020 and thirteen weeks ended March 30, 2019:

 
 
Thirteen Weeks Ended
March 28, 2020
 
Thirteen Weeks Ended
March 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
 
Operating cash outflow from operating leases
 
$
4,621

 
$
4,631

Operating cash outflow from finance leases
 
36

 
10

Financing cash outflow from finance leases
 
206

 
142



Maturities of our lease liabilities for all operating and finance leases are as follows as of March 28, 2020:
 
 
Operating Leases
 
Finance Leases
Less than one year
 
$
16,960

 
$
902

1 to 2 years
 
15,206

 
726

2 to 3 years
 
13,336

 
453

3 to 4 years
 
11,603

 
345

4 to 5 years
 
11,262

 
36

After 5 years
 
41,019

 

Total future minimum rental commitments
 
109,386

 
2,462

Less - amounts representing interest
 
(28,466
)
 
(249
)
Present value of lease liabilities
 
$
80,920

 
$
2,213




As of December 28, 2019, maturities of our lease liabilities for all operating and finance leases were expected to be as follows:
 
 
Operating Leases
 
Finance Leases
Less than one year
 
$
17,525

 
$
873

1 to 2 years
 
15,956

 
712

2 to 3 years
 
13,925

 
456

3 to 4 years
 
12,045

 
383

4 to 5 years
 
11,716

 
127

After 5 years
 
43,591

 

Total future minimum rental commitments
 
114,758

 
2,551

Less - amounts representing interest
 
(30,072
)
 
(276
)
Present value of lease liabilities
 
84,686

 
2,275


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 weeks ended March 28, 2020 and thirteen weeks ended March 30, 2019 were as follows:

 
 
Thirteen Weeks Ended
March 28, 2020
 
Thirteen Weeks Ended
March 30, 2019
Operating lease cost
 
$
4,747

 
$
4,723

Short term lease costs
 
520

 
1,233

Variable lease costs
 
181

 
188

Finance lease cost:
 
 
 
 
Amortization of right of use assets
 
202

 
92

Interest on lease liabilities
 
36

 
15




Rent expense totaled $5,448 and $6,144 in the thirteen weeks ended March 28, 2020 and thirteen weeks ended March 30, 2019, 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 & finance leases were as follows as of March 28, 2020 and December 28, 2019:

 
 
March 28, 2020
 
December 28, 2019
 
 
Operating Leases
 
Finance Leases
 
Operating Leases
 
Finance Leases
Weighted average remaining lease term
 
7.81

 
3.18

 
7.88

 
3.46

Weighted average discount rate
 
7.83
%
 
6.44
%
 
7.81
%
 
6.49
%


Supplemental balance sheet information related to the Company's finance leases was as follows as of March 28, 2020 and December 28, 2019:
 
 
March 28, 2020
 
December 28, 2019
Finance lease assets, net, included in property plant and equipment
 
$
2,057

 
$
2,101

 
 
 
 
 
Current portion of long-term debt
 
779

 
749

Long-term debt, less current portion
 
1,434

 
1,526

Total principal payable on finance leases
 
2,213

 
2,275



Supplemental cash flow information related to the Company's operating leases was as follows for the thirteen weeks ended March 28, 2020 and thirteen weeks ended March 30, 2019:

 
 
Thirteen Weeks Ended
March 28, 2020
 
Thirteen Weeks Ended
March 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
 
Operating cash outflow from operating leases
 
$
4,621

 
$
4,631

Operating cash outflow from finance leases
 
36

 
10

Financing cash outflow from finance leases
 
206

 
142



Maturities of our lease liabilities for all operating and finance leases are as follows as of March 28, 2020:
 
 
Operating Leases
 
Finance Leases
Less than one year
 
$
16,960

 
$
902

1 to 2 years
 
15,206

 
726

2 to 3 years
 
13,336

 
453

3 to 4 years
 
11,603

 
345

4 to 5 years
 
11,262

 
36

After 5 years
 
41,019

 

Total future minimum rental commitments
 
109,386

 
2,462

Less - amounts representing interest
 
(28,466
)
 
(249
)
Present value of lease liabilities
 
$
80,920

 
$
2,213




As of December 28, 2019, maturities of our lease liabilities for all operating and finance leases were expected to be as follows:
 
 
Operating Leases
 
Finance Leases
Less than one year
 
$
17,525

 
$
873

1 to 2 years
 
15,956

 
712

2 to 3 years
 
13,925

 
456

3 to 4 years
 
12,045

 
383

4 to 5 years
 
11,716

 
127

After 5 years
 
43,591

 

Total future minimum rental commitments
 
114,758

 
2,551

Less - amounts representing interest
 
(30,072
)
 
(276
)
Present value of lease liabilities
 
84,686

 
2,275


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.