LEASES

12 Months Ended

Dec. 25, 2021

The Company has operating leases for plant locations, corporate offices, sales offices, and certain equipment. Outstanding leases at December 25, 2021 have remaining lease terms of one year to twenty-five years, some of which include options to extend leases for up to ten 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.

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.

The Company commenced on a new corporate headquarters operating lease with straight-line annual expense of approximately $5,100, a 2% annual increase in lease payment, and a 25 year term during 2021. In recognition of this lease, an operating lease asset of $71,853 and an operating long-term liability of $71,196 was recognized.

Lease cost and other information related to the Company's operating leases at December 25, 2021 and December 26, 2020 are as follows:


	Fifty-Two weeks ended December 25, 2021			Fifty-Two weeks ended December 26, 2020
Operating lease cost	$	27,421		$	23,976

Operating cash outflows from operating leases	$	27,793		$	25,390
ROU assets obtained in exchange for lease obligations	$	86,481		$	6,131
Weighted average remaining lease term	17 years			11 years
Weighted average discount rate	4.0		%	3.5		%

Operating lease cost includes approximately $1,500 for short-term lease costs and approximately $3,600 for variable lease payments in 2021.

As part of the adoption of ASC 842 in 2019, the Company evaluated the historical and projected cash flow generation of the operations at each of its long-term leased facilities. It was determined that one of those facilities, a galvanizing operation in Melbourne, Australia, would 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 25, 2021 and December 26, 2020 is as follows:


	Classification	December 25, 2021		December 26, 2020
Operating lease assets	Other assets	$	152,664	$	77,566

Operating lease short-term liabilities	Accrued expenses	16,754		14,658
Operating lease long-term liabilities	Operating lease liabilities	147,759		80,202
Total lease liabilities		$	164,513	$	94,860

Minimum lease payments under operating leases expiring subsequent to December 25, 2021 are as follows:


Fiscal year ending:
2022	$	23,217
2023	19,087
2024	16,066
2025	15,148
2026	13,531
Subsequent	148,326
Total minimum lease payments	$	235,375
Less: Interest	$	70,862
Present value of minimum lease payments	$	164,513