Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.20.2
Leases
9 Months Ended
Sep. 26, 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 thirty-nine weeks ended September 26, 2020 and thirteen and thirty-nine weeks ended September 28, 2019 were as follows:
Thirteen Weeks Ended
September 26, 2020
Thirty-nine Weeks Ended
September 26, 2020
Thirteen Weeks Ended
September 28, 2019
Thirty-nine Weeks Ended
September 28, 2019
Operating lease cost $ 4,989  $ 14,283  $ 5,101  $ 14,399 
Short term lease costs 633  1,682  668  2,644 
Variable lease costs 104  775  720  1,795 
Finance lease cost:
Amortization of right of use assets 206  608  190  425 
Interest on lease liabilities 34  106  35  78 


Rent expense totaled $5,726 and $6,489 in the thirteen weeks ended September 26, 2020 and thirteen weeks ended September 28, 2019, respectively. Rent expense totaled $16,740 and $18,838 in the thirty-nine weeks ended September 26, 2020 and thirty-nine weeks ended September 28, 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 and finance leases were as follows as of September 26, 2020 and December 28, 2019:

September 26, 2020 December 28, 2019
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted average remaining lease term 7.36 2.81 7.88 3.46
Weighted average discount rate 8.24  % 6.84  % 7.81  % 6.49  %
Supplemental balance sheet information related to the Company's finance leases was as follows as of September 26, 2020 and December 28, 2019:
September 26, 2020 December 28, 2019
Finance lease assets, net, included in property plant and equipment $ 1,902  $ 2,101 
Current portion of long-term debt 814  749 
Long-term debt, less current portion 1,221  1,526 
Total principal payable on finance leases 2,035  2,275 

Supplemental cash flow information related to the Company's operating leases was as follows for the thirty-nine weeks ended September 26, 2020 and thirty-nine weeks ended September 28, 2019:

Thirty-nine Weeks Ended
September 26, 2020
Thirty-nine Weeks Ended
September 28, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases $ 13,821  $ 13,872 
Operating cash outflow from finance leases 106  66 
Financing cash outflow from finance leases 624  484 

Maturities of our lease liabilities for all operating and finance leases are as follows as of September 26, 2020:
Operating Leases Finance Leases
Less than one year $ 18,428  $ 932 
1 to 2 years 15,845  692 
2 to 3 years 13,846  414 
3 to 4 years 13,019  211 
4 to 5 years 12,080  — 
After 5 years 37,814  — 
Total future minimum rental commitments 111,032  2,249 
Less - amounts representing interest (28,323) (214)
Present value of lease liabilities $ 82,709  $ 2,035 


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 thirty-nine weeks ended September 26, 2020 and thirteen and thirty-nine weeks ended September 28, 2019 were as follows:
Thirteen Weeks Ended
September 26, 2020
Thirty-nine Weeks Ended
September 26, 2020
Thirteen Weeks Ended
September 28, 2019
Thirty-nine Weeks Ended
September 28, 2019
Operating lease cost $ 4,989  $ 14,283  $ 5,101  $ 14,399 
Short term lease costs 633  1,682  668  2,644 
Variable lease costs 104  775  720  1,795 
Finance lease cost:
Amortization of right of use assets 206  608  190  425 
Interest on lease liabilities 34  106  35  78 


Rent expense totaled $5,726 and $6,489 in the thirteen weeks ended September 26, 2020 and thirteen weeks ended September 28, 2019, respectively. Rent expense totaled $16,740 and $18,838 in the thirty-nine weeks ended September 26, 2020 and thirty-nine weeks ended September 28, 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 and finance leases were as follows as of September 26, 2020 and December 28, 2019:

September 26, 2020 December 28, 2019
Operating Leases Finance Leases Operating Leases Finance Leases
Weighted average remaining lease term 7.36 2.81 7.88 3.46
Weighted average discount rate 8.24  % 6.84  % 7.81  % 6.49  %
Supplemental balance sheet information related to the Company's finance leases was as follows as of September 26, 2020 and December 28, 2019:
September 26, 2020 December 28, 2019
Finance lease assets, net, included in property plant and equipment $ 1,902  $ 2,101 
Current portion of long-term debt 814  749 
Long-term debt, less current portion 1,221  1,526 
Total principal payable on finance leases 2,035  2,275 

Supplemental cash flow information related to the Company's operating leases was as follows for the thirty-nine weeks ended September 26, 2020 and thirty-nine weeks ended September 28, 2019:

Thirty-nine Weeks Ended
September 26, 2020
Thirty-nine Weeks Ended
September 28, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases $ 13,821  $ 13,872 
Operating cash outflow from finance leases 106  66 
Financing cash outflow from finance leases 624  484 

Maturities of our lease liabilities for all operating and finance leases are as follows as of September 26, 2020:
Operating Leases Finance Leases
Less than one year $ 18,428  $ 932 
1 to 2 years 15,845  692 
2 to 3 years 13,846  414 
3 to 4 years 13,019  211 
4 to 5 years 12,080  — 
After 5 years 37,814  — 
Total future minimum rental commitments 111,032  2,249 
Less - amounts representing interest (28,323) (214)
Present value of lease liabilities $ 82,709  $ 2,035 


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.