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Leases

12 Months Ended

Dec. 28, 2019

LEASES

The Company leases certain distribution and warehouse facilities, office facilities, fleet vehicles, and office and warehouse equipment. The Company determines if an arrangement is a lease at inception and recognizes a financing or operating lease liability and right-of-use (“ROU”) asset in the Company’s Consolidated Balance Sheets. ROU assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term as of commencement date. For the Company’s leases that do not provide an implicit borrowing rate, the Company uses its incremental borrowing rate based on the information available as of commencement date in determining the present value of future payments. The lease terms may include options to extend, terminate or buy out the lease. When it is reasonably certain that the Company will exercise these options, they are included

in ROU assets and the estimated lease liabilities. Leases with an initial term of 12 months or less are not recorded in the Company's Consolidated Balance Sheets. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which are accounted for separately. For office and warehouse equipment leases, the Company accounts for the lease and non-lease components as a single lease component. Variable lease payments that do not depend on an index or a rate, such as insurance and property taxes, are excluded from the measurement of the lease liability and are recognized as variable lease cost when the obligation for that payment is incurred.

The following table presents the location of the ROU assets and lease liabilities in the Company’s Consolidated Balance Sheet as of December 28, 2019:



Leases	Consolidated Balance Sheet Location	December 28, 2019
Assets
Operating	Other assets	$	145
Financing	Property and equipment-net⁽¹⁾	333
Total leased assets		$	478
Liabilities
Current:
Operating	Accrued expenses and other current liabilities	$	40
Financing	Current portion of long-term debt	95
Noncurrent:
Operating	Other long-term liabilities	131
Financing	Long-term debt	257
Total lease liabilities		$	523


(1)	Financing lease assets are recorded net of accumulated amortization of $269 million as of December 28, 2019.

The following table presents the location of lease costs in fiscal year 2019 in the Company's Consolidated Statement of Comprehensive Income:



Lease Cost	Statement of Comprehensive Income Location	2019
Operating lease cost	Distribution, selling and administrative costs	$	29
Financing lease cost:
Amortization of leased assets	Distribution, selling and administrative costs	76
Interest on lease liabilities	Interest expense-net	12
Variable lease cost	Distribution, selling and administrative costs	6
Net lease cost		$	123

Future lease payments under lease agreements as of December 28, 2019 were as follows:



	Operating Leases			Financing Lease Obligation			Total
2020	$	48		$	106		$	154
2021	38			84			122
2022	33			62			95
2023	30			58			88
2024	12			41			53
After 2024	42			29			71
Total lease payments	203			380			583
Less amount representing interest	(32		)	(28		)	(60		)
Present value of lease liabilities	$	171		$	352		$	523

Future minimum lease payments in effect as of December 29, 2018 under noncancelable lease arrangements, as determined prior to the adoption of Topic 842, were as follows:



Future Minimum Lease Payments	Operating Leases			Financing Leases			Total
2019	$	34		$	95		$	129
2020	34			84			118
2021	30			71			101
2022	27			54			81
2023	23			43			66
After 2023	7			38			45
Total lease payments	155			385			540
Less amount representing interest	(4		)	(33		)	(37		)
Present value of minimum lease payments	$	151		$	352		$	503

Other information related to lease agreements for fiscal year 2019 was as follows:



Cash Paid For Amounts Included In Measurement of Liabilities	2019
Operating cash flows from operating leases	$	37
Operating cash flows from financing leases	12
Financing cash flows from financing leases	90



Lease Term and Discount Rate	December 28, 2019
Weighted-average remaining lease term (years):
Operating leases	6.14
Financing leases	4.85
Weighted-average discount rate:
Operating leases	4.4	%
Financing leases	3.5	%

Finance leases