Leases

12 Months Ended

Jan. 01, 2022

Leases [Abstract]

Operating leases

LEASESThe 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, the associated payments 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 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 Sheets:

Leases	Consolidated Balance Sheet Location	January 1, 2022		January 2, 2021
Assets
Operating	Other assets	$	275	$	284
Financing	Property and equipment-net(1)	291		316
Total leased assets		$	566	$	600
Liabilities
Current:
Operating	Accrued expenses and other current liabilities	$	36	$	44
Financing	Current portion of long-term debt	72		86
Noncurrent:
Operating	Other long-term liabilities	244		263
Financing	Long-term debt	220		237
Total lease liabilities		$	572	$	630

(1)Financing lease assets are recorded net of accumulated amortization of $261 million and $244 million as of January 1, 2022 and January 2, 2021.

The following table presents the location of lease costs in fiscal years 2021, 2020 and 2019 in the Company's Consolidated Statements of Comprehensive Income:

Lease Cost	Statements of Comprehensive Income Location	2021		2020		2019
Operating lease cost	Distribution, selling and administrative costs	$	58	$	52	$	29
Financing lease cost:
Amortization of leased assets	Distribution, selling and administrative costs	73		79		76
Interest on lease liabilities	Interest expense-net	10		12		12
Short-term lease cost	Distribution, selling and administrative costs	1		—		—
Variable lease cost	Distribution, selling and administrative costs	11		13		6
Net lease cost		$	153	$	156	$	123

Future lease payments under lease agreements as of January 1, 2022 were as follows:

Maturity of Lease Liabilities	Operating Leases		Financing Lease Obligation		Total
2022	$	56	$	79	$	135
2023	55		77		132
2024	40		60		100
2025	39		41		80
2026	35		26		61
After 2026	140		30		170
Total lease payments	365		313		678
Less amount representing interest	(85)		(21)		(106)
Present value of lease liabilities	$	280	$	292	$	572

Other information related to lease agreements for fiscal years 2021, 2020 and 2019 was as follows:

Cash Paid For Amounts Included In Measurement of Liabilities	2021		2020		2019
Operating cash flows from operating leases	$	55	$	56	$	37
Operating cash flows from financing leases	10		12		12
Financing cash flows from financing leases	87		102		90

Lease Term and Discount Rate	January 1, 2022		January 2, 2021		December 28, 2019
Weighted-average remaining lease term (years):
Operating leases	8.30		8.42		6.14
Financing leases	5.74		5.31		4.85
Weighted-average discount rate:
Operating leases	6.1	%	6.6	%	4.4	%
Financing leases	3.2	%	3.2	%	3.5	%

Finance leases

LEASESThe 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, the associated payments 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 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 Sheets:

Leases	Consolidated Balance Sheet Location	January 1, 2022		January 2, 2021
Assets
Operating	Other assets	$	275	$	284
Financing	Property and equipment-net(1)	291		316
Total leased assets		$	566	$	600
Liabilities
Current:
Operating	Accrued expenses and other current liabilities	$	36	$	44
Financing	Current portion of long-term debt	72		86
Noncurrent:
Operating	Other long-term liabilities	244		263
Financing	Long-term debt	220		237
Total lease liabilities		$	572	$	630

(1)Financing lease assets are recorded net of accumulated amortization of $261 million and $244 million as of January 1, 2022 and January 2, 2021.

The following table presents the location of lease costs in fiscal years 2021, 2020 and 2019 in the Company's Consolidated Statements of Comprehensive Income:

Lease Cost	Statements of Comprehensive Income Location	2021		2020		2019
Operating lease cost	Distribution, selling and administrative costs	$	58	$	52	$	29
Financing lease cost:
Amortization of leased assets	Distribution, selling and administrative costs	73		79		76
Interest on lease liabilities	Interest expense-net	10		12		12
Short-term lease cost	Distribution, selling and administrative costs	1		—		—
Variable lease cost	Distribution, selling and administrative costs	11		13		6
Net lease cost		$	153	$	156	$	123

Future lease payments under lease agreements as of January 1, 2022 were as follows:

Maturity of Lease Liabilities	Operating Leases		Financing Lease Obligation		Total
2022	$	56	$	79	$	135
2023	55		77		132
2024	40		60		100
2025	39		41		80
2026	35		26		61
After 2026	140		30		170
Total lease payments	365		313		678
Less amount representing interest	(85)		(21)		(106)
Present value of lease liabilities	$	280	$	292	$	572

Other information related to lease agreements for fiscal years 2021, 2020 and 2019 was as follows:

Cash Paid For Amounts Included In Measurement of Liabilities	2021		2020		2019
Operating cash flows from operating leases	$	55	$	56	$	37
Operating cash flows from financing leases	10		12		12
Financing cash flows from financing leases	87		102		90

Lease Term and Discount Rate	January 1, 2022		January 2, 2021		December 28, 2019
Weighted-average remaining lease term (years):
Operating leases	8.30		8.42		6.14
Financing leases	5.74		5.31		4.85
Weighted-average discount rate:
Operating leases	6.1	%	6.6	%	4.4	%
Financing leases	3.2	%	3.2	%	3.5	%