Leases

6 Months Ended

Mar. 29, 2024

Leases [Abstract]

Leases

Leases

The components of lease expense (reflected in selling, general and administrative expenses) for the three and six months ended March 29, 2024 and March 31, 2023 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2024		March 31, 2023		March 29, 2024		March 31, 2023
Lease expense
Operating lease expense	$	33,992	$	35,539	$	68,192	$	70,821
Variable lease expense	9,799		9,416		19,136		18,762
Sublease income	(4,757)		(4,414)		(9,468)		(8,820)
Total lease expense	$	39,034	$	40,541	$	77,860	$	80,763

Supplemental information related to the Company's leases for the six months ended March 29, 2024 and March 31, 2023 was as follows (in thousands):

	Six Months Ended
	March 29, 2024		March 31, 2023
Cash paid for amounts included in the measurements of lease liabilities	$	91,565	$	92,142
Right-of-use assets obtained in exchange for new operating lease liabilities	$	23,742	$	42,150
Weighted average remaining lease term - operating leases	5.7 years		6.1 years
Weighted average discount rate - operating leases	3.4%		3.0%

Total remaining lease payments under the Company's leases for the remainder of fiscal 2024 and for the succeeding years is as follows (in thousands):

Fiscal Year	Operating Leases
2024	$	89,020
2025	149,091
2026	125,476
2027	102,627
2028	84,734
Thereafter	166,659
	717,607
Less Interest	(66,212)
	$	651,395

Right-of-Use and Other Long-Lived Asset Impairment

During fiscal 2023, as a result of the Company's transformation initiatives, including the changing nature of the Company's use of office space for its workforce, the Company evaluated its existing real estate lease portfolio. These initiatives resulted in the abandonment of certain leased office spaces and the establishment of a formal plan to sublease certain other leased spaces that will no longer be utilized by the Company. In connection with the Company’s actions related to these initiatives, the Company evaluated certain of its lease right-of-use assets and related property, equipment and leasehold improvements for impairment under ASC 360.

As a result of the analysis, the Company recognized impairment losses during the three and six months ended March 31, 2023 of $10.1 million and $37.2 million, respectively, which are included in selling, general, and administrative expenses in the accompanying statement of earnings. The impairment losses recorded include $32.4 million related to the right-of-use lease assets and $4.8 million related to the other long-lived assets, including property, equipment, and improvements and leasehold improvements for the fiscal 2023 period.

The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs. The significant assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates that reflect the level of risk associated with receiving future cash flows.

Leases

Leases

The components of lease expense (reflected in selling, general and administrative expenses) for the three and six months ended March 29, 2024 and March 31, 2023 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	March 29, 2024		March 31, 2023		March 29, 2024		March 31, 2023
Lease expense
Operating lease expense	$	33,992	$	35,539	$	68,192	$	70,821
Variable lease expense	9,799		9,416		19,136		18,762
Sublease income	(4,757)		(4,414)		(9,468)		(8,820)
Total lease expense	$	39,034	$	40,541	$	77,860	$	80,763

Supplemental information related to the Company's leases for the six months ended March 29, 2024 and March 31, 2023 was as follows (in thousands):

	Six Months Ended
	March 29, 2024		March 31, 2023
Cash paid for amounts included in the measurements of lease liabilities	$	91,565	$	92,142
Right-of-use assets obtained in exchange for new operating lease liabilities	$	23,742	$	42,150
Weighted average remaining lease term - operating leases	5.7 years		6.1 years
Weighted average discount rate - operating leases	3.4%		3.0%

Total remaining lease payments under the Company's leases for the remainder of fiscal 2024 and for the succeeding years is as follows (in thousands):

Fiscal Year	Operating Leases
2024	$	89,020
2025	149,091
2026	125,476
2027	102,627
2028	84,734
Thereafter	166,659
	717,607
Less Interest	(66,212)
	$	651,395

Right-of-Use and Other Long-Lived Asset Impairment

During fiscal 2023, as a result of the Company's transformation initiatives, including the changing nature of the Company's use of office space for its workforce, the Company evaluated its existing real estate lease portfolio. These initiatives resulted in the abandonment of certain leased office spaces and the establishment of a formal plan to sublease certain other leased spaces that will no longer be utilized by the Company. In connection with the Company’s actions related to these initiatives, the Company evaluated certain of its lease right-of-use assets and related property, equipment and leasehold improvements for impairment under ASC 360.

As a result of the analysis, the Company recognized impairment losses during the three and six months ended March 31, 2023 of $10.1 million and $37.2 million, respectively, which are included in selling, general, and administrative expenses in the accompanying statement of earnings. The impairment losses recorded include $32.4 million related to the right-of-use lease assets and $4.8 million related to the other long-lived assets, including property, equipment, and improvements and leasehold improvements for the fiscal 2023 period.

The fair values for the asset groups relating to the impaired long-lived assets were estimated primarily using discounted cash flow models (income approach) with Level 3 inputs. The significant assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods and discount rates that reflect the level of risk associated with receiving future cash flows.