COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 29, 2019

Commitments and Contingencies Disclosure [Abstract]

Workers’ compensation commitments

Our insurance carriers and certain state workers’ compensation programs require us to collateralize a portion of our workers’ compensation obligation, for which they become responsible should we become insolvent. The collateral typically takes the form

of cash and cash equivalents, highly-rated investment grade debt securities, letters of credit, and/or surety bonds. On a regular basis these entities assess the amount of collateral they will require from us relative to our workers’ compensation obligation. The majority of our collateral obligations are held in the Trust.

We have provided our insurance carriers and certain states with commitments in the form and amounts listed below:



(in thousands)	December 29, 2019		December 30, 2018
Cash collateral held by workers’ compensation insurance carriers	$	22,256	$	22,264
Cash and cash equivalents held in Trust	23,681		28,021
Investments held in Trust	149,373		156,618
Letters of credit (1)	6,202		6,691
Surety bonds (2)	20,731		21,881
Total collateral commitments	$	222,243	$	235,475


(1)	We have agreements with certain financial institutions to issue letters of credit as collateral.

(2)

Our surety bonds are issued by independent insurance companies on our behalf and bear annual fees based on a percentage of the bond, which are determined by each independent surety carrier. These fees do not exceed 2.0% of the bond amount, subject to a minimum charge. The terms of these bonds are subject to review and renewal every one to four years and most bonds can be canceled by the sureties with as little as 60 days’ notice.

Operating leases

We have contractual commitments in the form of operating leases related to office space, vehicles and equipment. Our leases have remaining terms of up to 17 years. Most leases include one or more options to renew, which can extend the lease term up to 10 years. The exercise of lease renewal options is at our sole discretion. Typically, at the commencement of a lease, we are not reasonably certain we will exercise renewal options, and accordingly they are not considered in determining the initial lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We rent or sublease real estate to third parties in limited circumstances.

Operating lease costs were comprised of the following:



	Year ended
(in thousands)	December 29, 2019
Operating lease costs	$	17,333
Short-term lease costs	7,110
Other lease costs (1)	4,722
Total lease costs	$	29,165


(1)	Other lease costs include immaterial variable lease costs and sublease income.

Other information related to our operating leases was as follows:



	December 29, 2019
Weighted average remaining lease term in years	4.1
Weighted average discount rate	5.0%

Future non-cancelable minimum lease payments under our operating lease commitments as of December 29, 2019, are as follows for each of the next five years and thereafter:



(in thousands)
2020	16,328
2021	12,283
2022	7,515
2023	5,375
2024	2,687
Thereafter	4,912
Total undiscounted future non-cancelable minimum lease payments (1)	49,100
Less: Imputed interest (2)	5,893
Present value of lease liabilities	$	43,207


(1)	Operating lease payments exclude approximately $36.7 million of legally binding minimum lease payments for leases signed but not yet commenced.


(2)	Amount necessary to reduce net minimum lease payments to present value calculated using our incremental borrowing rates, which are consistent with the lease terms at adoption date (for those leases in existence as of the adoption date of the new lease standard) or lease inception (for those leases entered into after the adoption date).

Future non-cancelable minimum lease payments under our operating lease commitments as of December 30, 2018 were as follows for each of the next five years and thereafter:



(in thousands)
2019	$	8,337
2020	7,192
2021	4,990
2022	2,442
2023	1,324
Thereafter	699
Total future non-cancelable minimum lease payments	$	24,984

Total lease expense for fiscal 2018 and 2017 was $27.3 million and $25.9 million, respectively.

Purchase obligations

Purchase obligations include agreements to purchase goods and services in the ordinary course of business that are enforceable, legally binding and specify all significant terms. Purchase obligations do not include agreements that are cancelable without significant penalty. We had $29.8 million of purchase obligations as of December 29, 2019, of which $13.8 million are expected to be paid in 2020.

Legal contingencies and developments

We are involved in various proceedings arising in the normal course of conducting business. We believe the liabilities included in our consolidated financial statements reflect the probable loss that can be reasonably estimated. The resolution of those proceedings is not expected to have a material effect on our results of operations or financial condition.