Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.20.2
Leases
 6 Months Ended
Jun. 27, 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 and twenty-six weeks ended June 27, 2020 and thirteen weeks ended June 29, 2019 were as follows:
Thirteen Weeks Ended
June 27, 2020		 Twenty-six Weeks Ended
June 27, 2020		 Thirteen Weeks Ended
June 29, 2019		 Twenty-six Weeks Ended
June 29, 2019
Operating lease cost $ 4,547    $ 9,294    $ 4,575    $ 9,298   
Short term lease costs 528    1,049    742    1,975   
Variable lease costs 491    671    352    540   
Finance lease cost:
Amortization of right of use assets 200    402    143    235   
Interest on lease liabilities 36    72    28    43   


Rent expense totaled $5,566 and $5,669 in the thirteen weeks ended June 27, 2020 and thirteen weeks ended June 29, 2019, respectively. Rent expense totaled $11,014 and $11,813 in the twenty-six weeks ended June 27, 2020 and twenty-six weeks ended June 29, 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 June 27, 2020 and December 28, 2019:

June 27, 2020 December 28, 2019
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted average remaining lease term 7.58 3.00 7.88 3.46
Weighted average discount rate 8.20  % 6.62  % 7.81  % 6.49  %


Supplemental balance sheet information related to the Company's finance leases was as follows as of June 27, 2020 and December 28, 2019:
June 27, 2020 December 28, 2019
Finance lease assets, net, included in property plant and equipment $ 1,967    $ 2,101   
Current portion of long-term debt 791    749   
Long-term debt, less current portion 1,321    1,526   
Total principal payable on finance leases 2,112    2,275   

Supplemental cash flow information related to the Company's operating leases was as follows for the twenty-six weeks ended June 27, 2020 and twenty-six weeks ended June 29, 2019:

Twenty-six Weeks Ended
June 27, 2020		 Twenty-six Weeks Ended
June 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases $ 8,956    $ 9,129   
Operating cash outflow from finance leases 72    31   
Financing cash outflow from finance leases 411    283   
Maturities of our lease liabilities for all operating and finance leases are as follows as of June 27, 2020:
Operating Leases Finance Leases
Less than one year $ 18,162    $ 911   
1 to 2 years 16,043    703   
2 to 3 years 14,138    430   
3 to 4 years 12,807    293   
4 to 5 years 12,393    5   
After 5 years 40,745    —   
Total future minimum rental commitments 114,288    2,342   
Less - amounts representing interest (29,829)   (230)  
Present value of lease liabilities $ 84,459    $ 2,112   


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 and twenty-six weeks ended June 27, 2020 and thirteen weeks ended June 29, 2019 were as follows:
Thirteen Weeks Ended
June 27, 2020		 Twenty-six Weeks Ended
June 27, 2020		 Thirteen Weeks Ended
June 29, 2019		 Twenty-six Weeks Ended
June 29, 2019
Operating lease cost $ 4,547    $ 9,294    $ 4,575    $ 9,298   
Short term lease costs 528    1,049    742    1,975   
Variable lease costs 491    671    352    540   
Finance lease cost:
Amortization of right of use assets 200    402    143    235   
Interest on lease liabilities 36    72    28    43   


Rent expense totaled $5,566 and $5,669 in the thirteen weeks ended June 27, 2020 and thirteen weeks ended June 29, 2019, respectively. Rent expense totaled $11,014 and $11,813 in the twenty-six weeks ended June 27, 2020 and twenty-six weeks ended June 29, 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 June 27, 2020 and December 28, 2019:

June 27, 2020 December 28, 2019
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted average remaining lease term 7.58 3.00 7.88 3.46
Weighted average discount rate 8.20  % 6.62  % 7.81  % 6.49  %


Supplemental balance sheet information related to the Company's finance leases was as follows as of June 27, 2020 and December 28, 2019:
June 27, 2020 December 28, 2019
Finance lease assets, net, included in property plant and equipment $ 1,967    $ 2,101   
Current portion of long-term debt 791    749   
Long-term debt, less current portion 1,321    1,526   
Total principal payable on finance leases 2,112    2,275   

Supplemental cash flow information related to the Company's operating leases was as follows for the twenty-six weeks ended June 27, 2020 and twenty-six weeks ended June 29, 2019:

Twenty-six Weeks Ended
June 27, 2020		 Twenty-six Weeks Ended
June 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases $ 8,956    $ 9,129   
Operating cash outflow from finance leases 72    31   
Financing cash outflow from finance leases 411    283   
Maturities of our lease liabilities for all operating and finance leases are as follows as of June 27, 2020:
Operating Leases Finance Leases
Less than one year $ 18,162    $ 911   
1 to 2 years 16,043    703   
2 to 3 years 14,138    430   
3 to 4 years 12,807    293   
4 to 5 years 12,393    5   
After 5 years 40,745    —   
Total future minimum rental commitments 114,288    2,342   
Less - amounts representing interest (29,829)   (230)  
Present value of lease liabilities $ 84,459    $ 2,112   


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.