LEASES

12 Months Ended

Dec. 26, 2020

The Company has operating leases for plant locations, corporate offices, sales offices, and certain equipment. Outstanding leases at December 26, 2020 have remaining lease terms of one year to fifteen years, some of which include options to extend leases for up to five years. The Company does not have any financing leases. The Company elected practical expedients not to reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, to not reassess initial direct costs for any existing leases, to use hindsight in determining the lease term and in assessing impairment of the right-of-use asset, and to not separate lease and non-lease components for all classes of underlying assets. Commencing in 2021, the Company has an operating lease with first year annual cash expense of approximately $4,000 that will increase 2% annually over the 25 year term.

The Company determines if an arrangement is a lease at inception. Operating leases are included in other assets, accrued expenses, and lease liabilities in our consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make future lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company used its collateralized incremental borrowing rate in determining the present value of future lease payments. The operating lease ROU asset also includes any lease payments made and excludes any lease incentives and impairments. Some of the Company's facility leases include options to extend the lease when it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

Lease cost and other information related to the Company's operating leases at December 26, 2020 and December 28, 2019 are as follows:


	Fifty-Two weeks ended December 26, 2020			Fifty-Two weeks ended December 28, 2019
Operating lease cost	$	23,976		$	24,073

Operating cash outflows from operating leases	$	25,390		$	24,835
ROU assets obtained in exchange for lease obligations	$	6,131		$	13,474
Weighted average remaining lease term	11 years			10 years
Weighted average discount rate	3.5		%	3.8		%

Operating lease cost includes approximately $2,500 for short-term lease costs and approximately $2,000 for variable lease payments in 2020 and 2019.

As part of the adoption of ASC 842, the Company evaluated at the historical and projected cash flow generation of the operations at each of its long-term leased facilities. One of those facilities, a galvanizing operation in Melbourne, Australia, will not generate sufficient cash flows on an undiscounted cash flow basis to recover the carrying value of the right of use asset. The Company then estimated a value for this operation using a discounted cash flow model. The result was an impairment of the right-of-use lease asset of approximately $12,063. The after-tax balance of $8,444 was recorded as a reduction to retained earnings for the transition adjustment of adoption.

Supplemental balance sheet information related to operating leases as of December 26, 2020 and December 28, 2019 is as follows:


	Classification	December 26, 2020		December 28, 2019
Operating lease assets	Other assets	$	77,566	$	86,998

Operating lease short-term liabilities	Accrued expenses	14,658		15,226
Operating lease long-term liabilities	Operating lease liabilities	80,202		85,817
Total lease liabilities		$	94,860	$	101,043

Minimum lease payments under operating leases expiring subsequent to December 26, 2020 are as follows:


Fiscal year ending:
2021	$	17,941
2022	14,389
2023	11,097
2024	9,476
2025	9,095
Subsequent	52,383
Total minimum lease payments	$	114,381
Less: Interest	$	19,521
Present value of minimum lease payments	$	94,860