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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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- References

No definition available.

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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

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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

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