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LEASES
 12 Months Ended
Jan. 02, 2021
Leases [Abstract]  
LEASES LEASES
We determine if an arrangement is or contains a lease at contract inception and determines its classification as an operating or finance lease at lease commencement. We lease certain retail locations, office space, distribution facilities, manufacturing space, and machinery and equipment. While the substantial majority of these leases are operating leases, certain machinery and equipment agreements are finance leases. As of January 2, 2021, the initial lease terms of the various leases range from one to 20 years. ROU lease assets and liabilities associated with leases with an initial term of twelve months or less are not recorded on the balance sheet.
Operating lease assets represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are recognized based on the present value of future payments over the lease term at commencement date. We use our collateralized incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. Our operating leases also typically require payment of real estate taxes, common area maintenance and insurance. These components comprise the majority of our variable lease cost and are excluded from the present value of our lease obligations. In instances where they are fixed, they are included due to our election to combine lease and non-lease components, with the exception of our distribution facility asset class. Operating lease assets include prepaid lease payments and initial direct costs and are reduced by lease incentives. Our lease terms generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised. Fixed payments may contain predetermined fixed rent escalations. We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term.
The following table presents the assets and liabilities related to operating and finance leases (in thousands):

Balance Sheet Location
January 2, 2021
Assets:
Operating lease assetsOperating lease right-of-use assets$34,090 
Finance lease assetsProperty, plant and equipment909 
Total lease assets$34,999 
Liabilities:
Current
Operating lease liabilitiesOperating lease liabilities$8,247 
Finance lease liabilitiesCurrent maturities of long-term debt197 
Non-current
Operating lease liabilitiesOperating lease liabilities, non-current36,546 
Finance lease liabilitiesLong-term debt, net of current portion753 
Total lease liabilities$45,743 

The following table presents the components of lease costs (in thousands):
Fiscal Year Ended
January 2, 2021
Operating lease costs$9,599 
Finance lease cost - amortization of right-of-use assets211 
Finance lease cost - interest on lease liabilities64 
Short-term lease cost185 
Variable lease cost3,349 
Sublease income(757)
Total lease cost$12,651 

The following table presents lease terms and discount rates:

January 2, 2021
Weighted average remaining lease term:
Operating leases6.15 years
Finance leases3.66 years
Weighted average discount rate:
Operating leases6.42 %
Finance leases6.24 %
Minimum lease payments have not been reduced by minimum sublease rentals of $3.2 million due in the future under non-cancelable subleases. We received $0.8 million, $0.7 million, and $0.4 million in sublease income for 2020, 2019, and 2018, respectively. The following table presents the minimum lease payment obligations of operating and finance lease liabilities (leases with terms in excess of one year) for the next five years and thereafter as of January 2, 2021 (in thousands):

Operating LeasesFinance LeasesTotal
2021$10,852 $249 $11,101 
20227,752 249 8,001 
20238,044 249 8,293 
20247,759 330 8,089 
20257,035 — 7,035 
Thereafter13,268 — 13,268 
Total lease payments54,710 1,077 55,787 
Less: Effect of discounting to net present value9,917 127 10,044 
Present value of lease liabilities$44,793 $950 $45,743 

The following table presents supplemental cash flow information related to our leases (in thousands):

January 2, 2021
Cash paid for amounts included in measurement of liabilities:
Operating cash flows used in operating leases$11,097 
Operating cash flows used in finance leases64 
Financing cash flows used in finance leases185 
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases2,831 
LEASES LEASES
We determine if an arrangement is or contains a lease at contract inception and determines its classification as an operating or finance lease at lease commencement. We lease certain retail locations, office space, distribution facilities, manufacturing space, and machinery and equipment. While the substantial majority of these leases are operating leases, certain machinery and equipment agreements are finance leases. As of January 2, 2021, the initial lease terms of the various leases range from one to 20 years. ROU lease assets and liabilities associated with leases with an initial term of twelve months or less are not recorded on the balance sheet.
Operating lease assets represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are recognized based on the present value of future payments over the lease term at commencement date. We use our collateralized incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. Our operating leases also typically require payment of real estate taxes, common area maintenance and insurance. These components comprise the majority of our variable lease cost and are excluded from the present value of our lease obligations. In instances where they are fixed, they are included due to our election to combine lease and non-lease components, with the exception of our distribution facility asset class. Operating lease assets include prepaid lease payments and initial direct costs and are reduced by lease incentives. Our lease terms generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised. Fixed payments may contain predetermined fixed rent escalations. We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term.
The following table presents the assets and liabilities related to operating and finance leases (in thousands):

Balance Sheet Location
January 2, 2021
Assets:
Operating lease assetsOperating lease right-of-use assets$34,090 
Finance lease assetsProperty, plant and equipment909 
Total lease assets$34,999 
Liabilities:
Current
Operating lease liabilitiesOperating lease liabilities$8,247 
Finance lease liabilitiesCurrent maturities of long-term debt197 
Non-current
Operating lease liabilitiesOperating lease liabilities, non-current36,546 
Finance lease liabilitiesLong-term debt, net of current portion753 
Total lease liabilities$45,743 

The following table presents the components of lease costs (in thousands):
Fiscal Year Ended
January 2, 2021
Operating lease costs$9,599 
Finance lease cost - amortization of right-of-use assets211 
Finance lease cost - interest on lease liabilities64 
Short-term lease cost185 
Variable lease cost3,349 
Sublease income(757)
Total lease cost$12,651 

The following table presents lease terms and discount rates:

January 2, 2021
Weighted average remaining lease term:
Operating leases6.15 years
Finance leases3.66 years
Weighted average discount rate:
Operating leases6.42 %
Finance leases6.24 %
Minimum lease payments have not been reduced by minimum sublease rentals of $3.2 million due in the future under non-cancelable subleases. We received $0.8 million, $0.7 million, and $0.4 million in sublease income for 2020, 2019, and 2018, respectively. The following table presents the minimum lease payment obligations of operating and finance lease liabilities (leases with terms in excess of one year) for the next five years and thereafter as of January 2, 2021 (in thousands):

Operating LeasesFinance LeasesTotal
2021$10,852 $249 $11,101 
20227,752 249 8,001 
20238,044 249 8,293 
20247,759 330 8,089 
20257,035 — 7,035 
Thereafter13,268 — 13,268 
Total lease payments54,710 1,077 55,787 
Less: Effect of discounting to net present value9,917 127 10,044 
Present value of lease liabilities$44,793 $950 $45,743 

The following table presents supplemental cash flow information related to our leases (in thousands):

January 2, 2021
Cash paid for amounts included in measurement of liabilities:
Operating cash flows used in operating leases$11,097 
Operating cash flows used in finance leases64 
Financing cash flows used in finance leases185 
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases2,831