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Leases
 9 Months Ended
Oct. 02, 2021
Leases [Abstract]  
Leases LeasesWe have operating and finance leases for certain of our distribution facilities, office space, land, mobile fleet, and equipment. Many of our leases are non-cancelable and typically have a defined initial lease term, and some provide options to renew at our election for specified periods of time. The majority of our leases have remaining lease terms of 1 year to 15 years, some of which include one or more options to extend the leases for 5 years. Our leases generally provide for fixed annual rentals. Certain of our leases include provisions for escalating rent based on, among other things, contractually defined increases and/or changes in the Consumer Price Index (“CPI”). The known changes to lease payments are included in the lease liability at lease commencement. Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, a subset of our vehicle lease cost is considered variable. Some of our leases require us to pay taxes, insurance, and maintenance expenses associated with the leased assets. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or modification. Operating lease right-of use (“ROU”) assets and liabilities are presented separately on the condensed consolidated balance sheets. Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheet. When a lease does not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. We have also made the accounting policy election to not separate lease components from non-lease components related to our mobile fleet asset class.
Finance Lease Liabilities
Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate. As noted in the table below, a majority of our finance leases, formally known as capital leases, relate to real estate.

During the first and second quarters of fiscal 2021, we recorded finance leases of $10.2 million and $0.3 million, respectively, related to new tractors put into service as part of our mobile fleet. These leases were entered into for a period of four years each.

Additionally, during the second quarter of fiscal 2021, we recorded operating leases totaling $5.0 million related to warehouse facilities in Milwaukee, WI, and Statesville, NC. Each lease was entered into for an initial period of ten years, and has two five-year renewal options.
The following table presents our assets and liabilities related to our leases as of October 2, 2021 and January 2, 2021:
Lease assets and liabilitiesOctober 2, 2021January 2, 2021
(In thousands)
AssetsClassification
Operating lease right-of-use assetsOperating lease right-of-use assets$51,178 $51,142 
Finance lease right-of-use assets (1)
Property and equipment, net148,426 148,561 
Total lease right-of-use assets$199,604 $199,703 
Liabilities
Current portion
Operating lease liabilitiesOperating lease liabilities - short term$4,881 $6,076 
Finance lease liabilitiesFinance lease liabilities - short term5,606 5,675 
Non-current portion
Operating lease liabilitiesOperating lease liabilities - long term46,412 44,965 
Finance lease liabilitiesFinance lease liabilities - long term271,314 267,443 
Total lease liabilities$328,213 $324,159 
(1) Finance lease right-of-use assets are presented net of accumulated amortization of $70.8 million and $58.6 million as of October 2, 2021 and January 2, 2021, respectively.
The components of lease expense were as follows:
Three Months EndedNine Months Ended
Components of lease expenseOctober 2, 2021September 26, 2020October 2, 2021September 26, 2020
(In thousands)(In thousands)
Operating lease cost:$2,959 $3,108 $8,942 $9,206 
Finance lease cost:
   Amortization of right-of-use assets$4,012 $4,648 $12,209 $11,526 
   Interest on lease liabilities6,244 4,949 18,659 17,670 
Total finance lease costs$10,256 $9,597 $30,868 $29,196 
Supplemental cash flow information related to leases was as follows:
Three Months EndedNine Months Ended
Cash flow informationOctober 2, 2021September 26, 2020October 2, 2021September 26, 2020
(In thousands)(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
   Operating cash flows from operating leases$2,822 $3,029 $8,193 $8,662 
   Operating cash flows from finance leases6,244 4,949 18,659 17,670 
   Financing cash flows from finance leases$3,026 $2,893 $7,697 $7,327 
Right-of-use assets obtained in exchange for lease obligations
   Operating leases$217 $3,640 $5,508 $3,668 
   Finance leases$— $3,145 $10,549 $3,145 
Supplemental balance sheet information related to leases was as follows:
Balance sheet informationOctober 2, 2021January 2, 2021
(In thousands)
Finance leases
   Property and equipment$219,192 $207,147 
   Accumulated depreciation(70,766)(58,586)
Property and equipment, net$148,426 $148,561 
Weighted Average Remaining Lease Term (in years)
   Operating leases10.8611.14
   Finance leases16.0516.08
Weighted Average Discount Rate
   Operating leases9.00 %9.28 %
   Finance leases9.94 %9.87 %
The major categories of our finance lease liabilities as of October 2, 2021 and January 2, 2021 are as follows:
CategoryOctober 2, 2021January 2, 2021
(In thousands)
Equipment and vehicles$33,717 $29,434 
Real estate243,203 243,684 
Total finance leases$276,920 $273,118 
As of October 2, 2021, maturities of lease liabilities were as follows:
Fiscal yearOperating leasesFinance leases
(In thousands)
2021$10,134 $8,238 
20229,402 32,495 
20237,943 32,191 
20248,207 31,575 
20257,322 27,850 
Thereafter42,310 379,747 
Total lease payments$85,318 $512,096 
Less: imputed interest(34,025)(235,176)
Total$51,293 $276,920 

On January 2, 2021, maturities of lease liabilities were as follows:
Fiscal yearOperating leasesFinance leases
(In thousands)
2021$11,215 $30,159 
20229,161 29,453 
20238,400 29,189 
20247,283 28,649 
20257,392 28,102 
Thereafter44,092 380,511 
Total lease payments$87,543 $526,063 
Less: imputed interest(36,502)(252,945)
Total$51,041 $273,118 
Leases LeasesWe have operating and finance leases for certain of our distribution facilities, office space, land, mobile fleet, and equipment. Many of our leases are non-cancelable and typically have a defined initial lease term, and some provide options to renew at our election for specified periods of time. The majority of our leases have remaining lease terms of 1 year to 15 years, some of which include one or more options to extend the leases for 5 years. Our leases generally provide for fixed annual rentals. Certain of our leases include provisions for escalating rent based on, among other things, contractually defined increases and/or changes in the Consumer Price Index (“CPI”). The known changes to lease payments are included in the lease liability at lease commencement. Unknown changes related to CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. In addition, a subset of our vehicle lease cost is considered variable. Some of our leases require us to pay taxes, insurance, and maintenance expenses associated with the leased assets. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or modification. Operating lease right-of use (“ROU”) assets and liabilities are presented separately on the condensed consolidated balance sheets. Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheet. When a lease does not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. We have also made the accounting policy election to not separate lease components from non-lease components related to our mobile fleet asset class.
Finance Lease Liabilities
Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate. As noted in the table below, a majority of our finance leases, formally known as capital leases, relate to real estate.

During the first and second quarters of fiscal 2021, we recorded finance leases of $10.2 million and $0.3 million, respectively, related to new tractors put into service as part of our mobile fleet. These leases were entered into for a period of four years each.

Additionally, during the second quarter of fiscal 2021, we recorded operating leases totaling $5.0 million related to warehouse facilities in Milwaukee, WI, and Statesville, NC. Each lease was entered into for an initial period of ten years, and has two five-year renewal options.
The following table presents our assets and liabilities related to our leases as of October 2, 2021 and January 2, 2021:
Lease assets and liabilitiesOctober 2, 2021January 2, 2021
(In thousands)
AssetsClassification
Operating lease right-of-use assetsOperating lease right-of-use assets$51,178 $51,142 
Finance lease right-of-use assets (1)
Property and equipment, net148,426 148,561 
Total lease right-of-use assets$199,604 $199,703 
Liabilities
Current portion
Operating lease liabilitiesOperating lease liabilities - short term$4,881 $6,076 
Finance lease liabilitiesFinance lease liabilities - short term5,606 5,675 
Non-current portion
Operating lease liabilitiesOperating lease liabilities - long term46,412 44,965 
Finance lease liabilitiesFinance lease liabilities - long term271,314 267,443 
Total lease liabilities$328,213 $324,159 
(1) Finance lease right-of-use assets are presented net of accumulated amortization of $70.8 million and $58.6 million as of October 2, 2021 and January 2, 2021, respectively.
The components of lease expense were as follows:
Three Months EndedNine Months Ended
Components of lease expenseOctober 2, 2021September 26, 2020October 2, 2021September 26, 2020
(In thousands)(In thousands)
Operating lease cost:$2,959 $3,108 $8,942 $9,206 
Finance lease cost:
   Amortization of right-of-use assets$4,012 $4,648 $12,209 $11,526 
   Interest on lease liabilities6,244 4,949 18,659 17,670 
Total finance lease costs$10,256 $9,597 $30,868 $29,196 
Supplemental cash flow information related to leases was as follows:
Three Months EndedNine Months Ended
Cash flow informationOctober 2, 2021September 26, 2020October 2, 2021September 26, 2020
(In thousands)(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
   Operating cash flows from operating leases$2,822 $3,029 $8,193 $8,662 
   Operating cash flows from finance leases6,244 4,949 18,659 17,670 
   Financing cash flows from finance leases$3,026 $2,893 $7,697 $7,327 
Right-of-use assets obtained in exchange for lease obligations
   Operating leases$217 $3,640 $5,508 $3,668 
   Finance leases$— $3,145 $10,549 $3,145 
Supplemental balance sheet information related to leases was as follows:
Balance sheet informationOctober 2, 2021January 2, 2021
(In thousands)
Finance leases
   Property and equipment$219,192 $207,147 
   Accumulated depreciation(70,766)(58,586)
Property and equipment, net$148,426 $148,561 
Weighted Average Remaining Lease Term (in years)
   Operating leases10.8611.14
   Finance leases16.0516.08
Weighted Average Discount Rate
   Operating leases9.00 %9.28 %
   Finance leases9.94 %9.87 %
The major categories of our finance lease liabilities as of October 2, 2021 and January 2, 2021 are as follows:
CategoryOctober 2, 2021January 2, 2021
(In thousands)
Equipment and vehicles$33,717 $29,434 
Real estate243,203 243,684 
Total finance leases$276,920 $273,118 
As of October 2, 2021, maturities of lease liabilities were as follows:
Fiscal yearOperating leasesFinance leases
(In thousands)
2021$10,134 $8,238 
20229,402 32,495 
20237,943 32,191 
20248,207 31,575 
20257,322 27,850 
Thereafter42,310 379,747 
Total lease payments$85,318 $512,096 
Less: imputed interest(34,025)(235,176)
Total$51,293 $276,920 

On January 2, 2021, maturities of lease liabilities were as follows:
Fiscal yearOperating leasesFinance leases
(In thousands)
2021$11,215 $30,159 
20229,161 29,453 
20238,400 29,189 
20247,283 28,649 
20257,392 28,102 
Thereafter44,092 380,511 
Total lease payments$87,543 $526,063 
Less: imputed interest(36,502)(252,945)
Total$51,041 $273,118