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LEASES | 9 Months Ended
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Sep. 29, 2024
Leases [Abstract] |
LEASES | LEASES We lease office and retail space, warehouse and distribution facilities, land, vehicles, and equipment. We determine if an agreement is or contains a lease at inception. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are based on the estimated present value of lease payments over the lease term and are recognized at the lease commencement date. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate in determining the present value of lease payments. The estimated incremental borrowing rate is derived from information available at the lease commencement date. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. A limited number of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements generally do not contain residual value guarantees or material restrictive covenants. For real estate, equipment and vehicles that support selling, marketing and general administrative activities, the Company accounts for the lease and non-lease components as a single lease component. These asset categories comprise the majority of our leases. The lease and non-lease components of real estate and equipment leases supporting production activities are not accounted for as a single lease component. Consideration for such contracts are allocated to the lease and non-lease components based upon relative standalone prices either observable or estimated if observable prices are not readily available. The components of lease expense for the three months ended September 29, 2024 and October 1, 2023 were as follows:
|  |  |  | Three Months Ended
Lease expense |  | Classification |  | September 29, 2024 |  | October 1, 2023
Operating lease cost |  | Cost of sales or SM&A (1) |  | $ | 13,678 |  |  | $ | 12,101 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets |  | Depreciation and amortization (1) |  | 2,133 |  |  | 1,849 |
Interest on lease liabilities |  | Interest expense, net |  | 1,140 |  |  | 1,095 |
Net lease cost (2) |  |  |  | $ | 16,951 |  |  | $ | 15,045 |
The components of lease expense for the nine months ended September 29, 2024 and October 1, 2023 were as follows:
|  |  |  | Nine Months Ended
Lease expense |  | Classification |  | September 29, 2024 |  | October 1, 2023
Operating lease cost |  | Cost of sales or SM&A (1) |  | $ | 39,159 |  |  | $ | 36,464 |
Finance lease cost: |  |  |  |  |  |
Amortization of ROU assets |  | Depreciation and amortization (1) |  | 6,504 |  |  | 5,545 |
Interest on lease liabilities |  | Interest expense, net |  | 3,489 |  |  | 3,287 |
Net lease cost (2) |  |  |  | $ | 49,152 |  |  | $ | 45,296 |
(1)Supply chain-related amounts were included in cost of sales. (2)Net lease cost does not include short-term leases, variable lease costs or sublease income, all of which are immaterial. Information regarding our lease terms and discount rates were as follows:
|  | September 29, 2024 |  | December 31, 2023
Weighted-average remaining lease term (years) |  |  |  |
Operating leases |  | 12.5 |  | 14.4
Finance leases |  | 26.2 |  | 25.9
Weighted-average discount rate |  |  |  |
Operating leases |  | 3.8 | % |  | 3.5 | %
Finance leases |  | 6.3 | % |  | 6.2 | %
Supplemental balance sheet information related to leases were as follows:
Leases |  | Classification |  | September 29, 2024 |  | December 31, 2023
Assets |  |  |  |  |  |
Operating lease ROU assets |  | Other non-current assets |  | $ | 347,576 |  |  | $ | 307,976 |
Finance lease ROU assets, at cost |  | Property, plant and equipment, gross |  | 87,182 |  |  | 89,335 |
Accumulated amortization |  | Accumulated depreciation |  | (24,027) |  |  | (19,472) |
Finance lease ROU assets, net |  | Property, plant and equipment, net |  | 63,155 |  |  | 69,863 |
Total leased assets |  |  |  | $ | 410,731 |  |  | $ | 377,839 |
Liabilities |  |  |  |  |  |
Current |  |  |  |  |  |
Operating |  | Accrued liabilities |  | $ | 39,523 |  |  | $ | 34,494 |
Finance |  | Current portion of long-term debt |  | 5,576 |  |  | 5,900 |
Non-current |  |  |  |  |  |
Operating |  | Other long-term liabilities |  | 314,400 |  |  | 277,089 |
Finance |  | Long-term debt |  | 67,814 |  |  | 70,485 |
Total lease liabilities |  |  |  | $ | 427,313 |  |  | $ | 387,968 |
The maturities of our lease liabilities as of September 29, 2024 were as follows:
| Operating leases |  | Finance leases |  | Total
2024 (rest of year) | $ | 12,328 |  |  | $ | 2,603 |  |  | $ | 14,931 |
2025 | 52,482 |  |  | 9,164 |  |  | 61,646 |
2026 | 48,593 |  |  | 6,090 |  |  | 54,683 |
2027 | 46,471 |  |  | 4,403 |  |  | 50,874 |
2028 | 28,955 |  |  | 4,215 |  |  | 33,170 |
Thereafter | 250,628 |  |  | 137,875 |  |  | 388,503 |
Total lease payments | 439,457 |  |  | 164,350 |  |  | 603,807 |
Less: Imputed interest | 85,534 |  |  | 90,960 |  |  | 176,494 |
Total lease liabilities | $ | 353,923 |  |  | $ | 73,390 |  |  | $ | 427,313 |
Supplemental cash flow and other information related to leases were as follows:
|  | Nine Months Ended
|  | September 29, 2024 |  | October 1, 2023
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 36,293 |  |  | $ | 33,872 |
Operating cash flows from finance leases |  | 3,489 |  |  | 3,287 |
Financing cash flows from finance leases |  | 4,543 |  |  | 3,540 |
ROU assets obtained in exchange for lease liabilities: |  |  |  |
Operating leases |  | $ | 70,383 |  |  | $ | 16,857 |
Finance leases |  | 983 |  |  | 993 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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