v3.23.3
LEASES
9 Months Ended
Oct. 01, 2023
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 October 1, 2023 and October 2, 2022 were as follows:  
Three Months Ended
Lease expenseClassificationOctober 1, 2023October 2, 2022
Operating lease costCost of sales or SM&A (1)$12,101 $11,812 
Finance lease cost:
Amortization of ROU assetsDepreciation and amortization (1)1,849 1,539 
Interest on lease liabilitiesInterest expense, net1,095 1,030 
Net lease cost (2)$15,045 $14,381 
The components of lease expense for the nine months ended October 1, 2023 and October 2, 2022 were as follows:
Nine Months Ended
Lease expenseClassificationOctober 1, 2023October 2, 2022
Operating lease costCost of sales or SM&A (1)$36,464 $37,309 
Finance lease cost:
Amortization of ROU assetsDepreciation and amortization (1)5,545 4,989 
Interest on lease liabilitiesInterest expense, net3,287 3,083 
Net lease cost (2)$45,296 $45,381 
(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:
October 1, 2023December 31, 2022
Weighted-average remaining lease term (years)
Operating leases14.515.0
Finance leases27.327.7
Weighted-average discount rate
Operating leases3.5 %3.2 %
Finance leases6.2 %6.1 %
Supplemental balance sheet information related to leases were as follows:
LeasesClassificationOctober 1, 2023December 31, 2022
Assets
Operating lease ROU assetsOther non-current assets$315,524 $326,472 
Finance lease ROU assets, at costProperty, plant and equipment, gross86,129 86,703 
Accumulated amortizationAccumulated depreciation(18,570)(14,543)
Finance lease ROU assets, netProperty, plant and equipment, net67,559 72,160 
Total leased assets$383,083 $398,632 
Liabilities
Current
OperatingAccrued liabilities$34,320 $31,787 
FinanceCurrent portion of long-term debt4,659 4,285 
Non-current
OperatingOther long-term liabilities283,967 294,849 
FinanceLong-term debt68,037 69,194 
Total lease liabilities$390,983 $400,115 

The maturity of our lease liabilities as of October 1, 2023 were as follows:
Operating leasesFinance leasesTotal
2023 (rest of year)$11,317 $2,300 $13,617 
202444,184 8,515 52,699 
202530,800 6,471 37,271 
202626,212 4,257 30,469 
202725,653 4,065 29,718 
Thereafter267,948 142,022 409,970 
Total lease payments406,114 167,630 573,744 
Less: Imputed interest87,827 94,934 182,761 
Total lease liabilities$318,287 $72,696 $390,983 

Supplemental cash flow and other information related to leases were as follows:
Nine Months Ended
October 1, 2023October 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$33,872 $34,528 
Operating cash flows from finance leases3,287 3,083 
Financing cash flows from finance leases3,540 3,336 
ROU assets obtained in exchange for lease liabilities:
Operating leases$16,857 $6,629 
Finance leases993 4,192