Leases

3 Months Ended

Dec. 28, 2024

Leases [Abstract]

Lessee, Operating Leases

Leases

We lease certain manufacturing facilities, office space and machinery and equipment globally. At inception, we evaluate whether a contractual arrangement contains a lease. Specifically, we consider whether we control the underlying asset and have the right to obtain substantially all the economic benefits or outputs from the asset. If the contractual arrangement contains a lease, we then determine the classification of the lease, operating or finance, using the classification criteria described in ASC 842. We then determine the term of the lease based on terms and conditions of the contractual arrangement, including whether the options to extend or terminate the lease are reasonably certain to be exercised. We have elected to not separate lease components from non-lease components, such as common area maintenance charges and instead, account for the lease and non-lease components as a single component.

Our lease right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and our lease liabilities represent our obligation to make lease payments. The ROU assets and lease liabilities for both operating and finance leases are recognized as of the commencement date at the net present value of the fixed minimum lease payments over the term of the lease including expected buyouts, using the discount rate described below. Variable lease payments are recorded in the period in which the obligation for the payment is incurred. Variable lease payments based on an index or rate are initially measured using the index or rate as of the commencement date of the lease and included in the fixed minimum lease payments. For short-term leases that have a term of 12 months or less as of the commencement date, we do not recognize a ROU asset or lease liability on our balance sheet; we recognize expense as the lease payments are made over the lease term.

Operating lease cost is included in Cost of sales and Selling, general and administrative on the Consolidated Condensed Statements of Earnings. Finance lease cost is included in Cost of sales, Selling, general and administrative and Interest on the Consolidated Condensed Statements of Earnings.

The discount rate used to calculate the present value of our leases is the rate implicit in the lease. If the information necessary to determine the rate implicit in the lease is not available, we use our incremental borrowing rate for collateralized debt, which is determined using our credit rating and other information available as of the lease commencement date.

The components of lease expense were as follows:

	Three Months Ended
	December 28, 2024		December 30, 2023
Operating lease cost	$	8,176	$	6,970
Finance lease cost:
Amortization of right-of-use assets	$	3,499	$	1,826
Interest on lease liabilities	2,458		1,232
Total finance lease cost	$	5,957	$	3,058

Supplemental cash flow information related to leases was as follows:

	Three Months Ended
	December 28, 2024		December 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow for operating leases	$	8,230	$	7,151
Operating cash flow for finance leases	2,458		1,232
Financing cash flow for finance leases	2,745		1,286
Assets obtained in exchange for lease obligations:
Operating leases	$	8,121	$	5,717
Finance leases	10,741		2,128

Supplemental balance sheet information related to leases was as follows:

	December 28, 2024			September 28, 2024
Operating Leases:
Operating lease right-of-use assets	$	56,744		$	52,591
Accrued liabilities and other	$	11,553		$	11,124
Other long-term liabilities	56,739			53,228
Total operating lease liabilities	$	68,292		$	64,352
Finance Leases:
Property, plant, and equipment, at cost	$	129,904		$	123,314
Accumulated depreciation	(18,750)			(14,875)
Property, plant, and equipment, net	$	111,154		$	108,439
Accrued liabilities and other	$	10,460		$	9,198
Other long-term liabilities	103,564			100,146
Total finance lease liabilities	$	114,024		$	109,344
Weighted average remaining lease term in years:
Operating leases	6.5			6.2
Finance leases	18.8			20.1
Weighted average discount rates:
Operating leases	5.3		%	5.2		%
Finance leases	6.4		%	6.4		%

Maturities of lease liabilities were as follows:

	December 28, 2024
	Operating Leases		Finance Leases
2025	$	11,091	$	11,870
2026	14,396		17,635
2027	13,112		15,242
2028	10,914		16,164
2029	8,671		17,023
Thereafter	22,669		139,674
Total lease payments	80,853		217,608
Less: imputed interest	(12,561)		(103,584)
Total	$	68,292	$	114,024

Lessee, Finance Leases

Leases

We lease certain manufacturing facilities, office space and machinery and equipment globally. At inception, we evaluate whether a contractual arrangement contains a lease. Specifically, we consider whether we control the underlying asset and have the right to obtain substantially all the economic benefits or outputs from the asset. If the contractual arrangement contains a lease, we then determine the classification of the lease, operating or finance, using the classification criteria described in ASC 842. We then determine the term of the lease based on terms and conditions of the contractual arrangement, including whether the options to extend or terminate the lease are reasonably certain to be exercised. We have elected to not separate lease components from non-lease components, such as common area maintenance charges and instead, account for the lease and non-lease components as a single component.

Our lease right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and our lease liabilities represent our obligation to make lease payments. The ROU assets and lease liabilities for both operating and finance leases are recognized as of the commencement date at the net present value of the fixed minimum lease payments over the term of the lease including expected buyouts, using the discount rate described below. Variable lease payments are recorded in the period in which the obligation for the payment is incurred. Variable lease payments based on an index or rate are initially measured using the index or rate as of the commencement date of the lease and included in the fixed minimum lease payments. For short-term leases that have a term of 12 months or less as of the commencement date, we do not recognize a ROU asset or lease liability on our balance sheet; we recognize expense as the lease payments are made over the lease term.

Operating lease cost is included in Cost of sales and Selling, general and administrative on the Consolidated Condensed Statements of Earnings. Finance lease cost is included in Cost of sales, Selling, general and administrative and Interest on the Consolidated Condensed Statements of Earnings.

The discount rate used to calculate the present value of our leases is the rate implicit in the lease. If the information necessary to determine the rate implicit in the lease is not available, we use our incremental borrowing rate for collateralized debt, which is determined using our credit rating and other information available as of the lease commencement date.

The components of lease expense were as follows:

	Three Months Ended
	December 28, 2024		December 30, 2023
Operating lease cost	$	8,176	$	6,970
Finance lease cost:
Amortization of right-of-use assets	$	3,499	$	1,826
Interest on lease liabilities	2,458		1,232
Total finance lease cost	$	5,957	$	3,058

Supplemental cash flow information related to leases was as follows:

	Three Months Ended
	December 28, 2024		December 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow for operating leases	$	8,230	$	7,151
Operating cash flow for finance leases	2,458		1,232
Financing cash flow for finance leases	2,745		1,286
Assets obtained in exchange for lease obligations:
Operating leases	$	8,121	$	5,717
Finance leases	10,741		2,128

Supplemental balance sheet information related to leases was as follows:

	December 28, 2024			September 28, 2024
Operating Leases:
Operating lease right-of-use assets	$	56,744		$	52,591
Accrued liabilities and other	$	11,553		$	11,124
Other long-term liabilities	56,739			53,228
Total operating lease liabilities	$	68,292		$	64,352
Finance Leases:
Property, plant, and equipment, at cost	$	129,904		$	123,314
Accumulated depreciation	(18,750)			(14,875)
Property, plant, and equipment, net	$	111,154		$	108,439
Accrued liabilities and other	$	10,460		$	9,198
Other long-term liabilities	103,564			100,146
Total finance lease liabilities	$	114,024		$	109,344
Weighted average remaining lease term in years:
Operating leases	6.5			6.2
Finance leases	18.8			20.1
Weighted average discount rates:
Operating leases	5.3		%	5.2		%
Finance leases	6.4		%	6.4		%

Maturities of lease liabilities were as follows:

	December 28, 2024
	Operating Leases		Finance Leases
2025	$	11,091	$	11,870
2026	14,396		17,635
2027	13,112		15,242
2028	10,914		16,164
2029	8,671		17,023
Thereafter	22,669		139,674
Total lease payments	80,853		217,608
Less: imputed interest	(12,561)		(103,584)
Total	$	68,292	$	114,024