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Leases | 9 Months Ended
--- | ---
Oct. 02, 2022
Leases [Abstract] |
Leases | Leases The Company included the following amounts related to operating and finance lease assets and liabilities within the Condensed Consolidated Balance Sheets:
|  | As of
|  | October 2, 2022 |  | January 2, 2022
Assets | Classification |  |  |
Operating lease | Operating lease right of use asset, net | $ | 410,001 |  |  | $ | 435,168 |
Finance lease | Property and equipment, net | 25,604 |  |  | 19,298 |
Total leased assets | $ | 435,605 |  |  | $ | 454,466 |
Liabilities |  |  |  |
Current |  |  |  |
Operating lease | Current operating lease liabilities | $ | 45,551 |  |  | $ | 50,359 |
Finance lease | Current portion of long-term debt | 5,243 |  |  | 1,583 |
Noncurrent |  |  |  |
Operating lease | Noncurrent operating lease liabilities | 400,594 |  |  | 415,208 |
Finance lease | Long-term debt, less current portion | 25,648 |  |  | 22,890 |
Total leased liabilities | $ | 477,036 |  |  | $ | 490,040 |
Lease costs were as follows:
|  | Quarter Ended |  | Three Quarters Ended
|  | October 2, 2022 |  | October 3, 2021 |  | October 2, 2022 |  | October 3, 2021
Lease cost | Classification |  |  |  |  |  |  |
Operating lease cost | Selling, general and administrative expense | $ | 666 |  |  | $ | 648 |  |  | $ | 1,643 |  |  | $ | 1,967 |
Operating lease cost | Operating expenses | 20,605 |  |  | 21,201 |  |  | 64,262 |  |  | 62,910 |
Short-term lease cost | Operating expenses | 1,555 |  |  | 233 |  |  | 3,841 |  |  | 1,797 |
Variable lease costs | Operating expenses | 6,032 |  |  | 4,015 |  |  | 17,367 |  |  | 11,309 |
Sublease income | Royalties and other revenues | (35) |  |  | (108) |  |  | (175) |  |  | (285) |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right of use assets | Depreciation and amortization expense | $ | 1,405 |  |  | $ | 727 |  |  | $ | 3,348 |  |  | $ | 2,375 |
Interest on lease liabilities | Interest expense, net | 489 |  |  | 466 |  |  | 1,430 |  |  | 1,540 |
Supplemental disclosures of cash flow information related to leases were as follows:
| Three Quarters Ended
| October 2, 2022 |  | October 3, 2021
Other information |  |  |
Cash paid for leases: |  |  |
Operating cash flows for operating leases(1) | $ | 77,122 |  |  | $ | 67,129 |
Operating cash flows for finance leases | 1,441 |  |  | 1,458 |
Financing cash flows for finance leases | 2,930 |  |  | 2,512 |
Right-of-use assets obtained in exchange for new lease liabilities: |  |  |
Operating leases | $ | 31,246 |  |  | $ | 48,770 |
Finance leases | 4,549 |  |  | 1,788 |
(1)Operating cash flows for operating leases include variable rent payments which are not included in the measurement of lease liabilities. For the three quarters ended October 2, 2022 and October 3, 2021, variable rent payments were $17.4 million and $11.3 million, respectively. The Company recognized $3.0 million and $4.4 million of lease termination charges in the quarter and three quarters ended October 2, 2022, respectively, related to the decision to exit certain Krispy Kreme shops in the U.S. There were no lease termination charges in the three quarters ended October 3, 2021. In March 2022, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $3.0 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $2.6 million, which is included in Other expenses/(income), net on the Condensed Consolidated Statement of Operations for the three quarters ended October 2, 2022. In September 2022, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $2.7 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $1.9 million, which is included in Other expenses/(income), net on the Condensed Consolidated Statement of Operations for the quarter ended October 2, 2022. There were no sale-leaseback transactions completed in the three quarters ended October 3, 2021.
Leases | Leases The Company included the following amounts related to operating and finance lease assets and liabilities within the Condensed Consolidated Balance Sheets:
|  | As of
|  | October 2, 2022 |  | January 2, 2022
Assets | Classification |  |  |
Operating lease | Operating lease right of use asset, net | $ | 410,001 |  |  | $ | 435,168 |
Finance lease | Property and equipment, net | 25,604 |  |  | 19,298 |
Total leased assets | $ | 435,605 |  |  | $ | 454,466 |
Liabilities |  |  |  |
Current |  |  |  |
Operating lease | Current operating lease liabilities | $ | 45,551 |  |  | $ | 50,359 |
Finance lease | Current portion of long-term debt | 5,243 |  |  | 1,583 |
Noncurrent |  |  |  |
Operating lease | Noncurrent operating lease liabilities | 400,594 |  |  | 415,208 |
Finance lease | Long-term debt, less current portion | 25,648 |  |  | 22,890 |
Total leased liabilities | $ | 477,036 |  |  | $ | 490,040 |
Lease costs were as follows:
|  | Quarter Ended |  | Three Quarters Ended
|  | October 2, 2022 |  | October 3, 2021 |  | October 2, 2022 |  | October 3, 2021
Lease cost | Classification |  |  |  |  |  |  |
Operating lease cost | Selling, general and administrative expense | $ | 666 |  |  | $ | 648 |  |  | $ | 1,643 |  |  | $ | 1,967 |
Operating lease cost | Operating expenses | 20,605 |  |  | 21,201 |  |  | 64,262 |  |  | 62,910 |
Short-term lease cost | Operating expenses | 1,555 |  |  | 233 |  |  | 3,841 |  |  | 1,797 |
Variable lease costs | Operating expenses | 6,032 |  |  | 4,015 |  |  | 17,367 |  |  | 11,309 |
Sublease income | Royalties and other revenues | (35) |  |  | (108) |  |  | (175) |  |  | (285) |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of right of use assets | Depreciation and amortization expense | $ | 1,405 |  |  | $ | 727 |  |  | $ | 3,348 |  |  | $ | 2,375 |
Interest on lease liabilities | Interest expense, net | 489 |  |  | 466 |  |  | 1,430 |  |  | 1,540 |
Supplemental disclosures of cash flow information related to leases were as follows:
| Three Quarters Ended
| October 2, 2022 |  | October 3, 2021
Other information |  |  |
Cash paid for leases: |  |  |
Operating cash flows for operating leases(1) | $ | 77,122 |  |  | $ | 67,129 |
Operating cash flows for finance leases | 1,441 |  |  | 1,458 |
Financing cash flows for finance leases | 2,930 |  |  | 2,512 |
Right-of-use assets obtained in exchange for new lease liabilities: |  |  |
Operating leases | $ | 31,246 |  |  | $ | 48,770 |
Finance leases | 4,549 |  |  | 1,788 |
(1)Operating cash flows for operating leases include variable rent payments which are not included in the measurement of lease liabilities. For the three quarters ended October 2, 2022 and October 3, 2021, variable rent payments were $17.4 million and $11.3 million, respectively. The Company recognized $3.0 million and $4.4 million of lease termination charges in the quarter and three quarters ended October 2, 2022, respectively, related to the decision to exit certain Krispy Kreme shops in the U.S. There were no lease termination charges in the three quarters ended October 3, 2021. In March 2022, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $3.0 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $2.6 million, which is included in Other expenses/(income), net on the Condensed Consolidated Statement of Operations for the three quarters ended October 2, 2022. In September 2022, the Company completed a sale-leaseback transaction whereby it disposed of the land at one real estate property for proceeds of $2.7 million. The Company subsequently leased back the property, which is accounted for as an operating lease. The Company recognized a gain on sale of $1.9 million, which is included in Other expenses/(income), net on the Condensed Consolidated Statement of Operations for the quarter ended October 2, 2022. There were no sale-leaseback transactions completed in the three quarters ended October 3, 2021.

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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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 -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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