Leases

12 Months Ended

Sep. 28, 2024

The Company’s lease portfolio includes both real estate and non-real estate type leases which are accounted for as either finance or operating leases. Real estate leases generally include office, warehouse and manufacturing facilities and non-real estate leases generally include equipment and vehicles. The Company determines if a contract is or contains a lease at inception. The Company’s leases have remaining lease terms of less than 1 year to 60 years. Renewal options that are deemed reasonably certain are included as part of the lease term for purposes of calculating the right-of-use (“ROU”) asset and lease liability. Variable lease payments are generally expensed as incurred and include certain index-based changes in rent, certain nonlease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. The Company elected the practical expedient to not separate lease and nonlease components, as such nonlease components are included in the calculation of the ROU asset and lease liability and included in the lease expense over the term of the lease. The Company uses a discount rate to calculate the ROU asset and lease liability. When the implicit rate is known or provided in the lease documents, the Company is required to use this rate. In cases in which the implicit rate is not known, the Company uses an estimated incremental borrowing rate.

Operating lease ROU assets and lease liabilities are recorded on the date the Company takes possession of the leased assets with expense recognized on a straight-line basis over the lease term. Leases with an estimated total term of 12 months or less are not recorded on the balance sheet and the lease expense is recognized on a straight-line basis over the lease term. Generally, the Company's lease agreements do not contain material residual value guarantees or material restrictive covenants.

The components of lease expense for fiscal years indicated were as follows (in thousands):


	2024		2023		2022
Finance lease expense:
Amortization of right-of-use assets	$	5,930	$	6,903	$	6,478
Interest on lease liabilities	5,340		5,132		4,927
Operating lease expense	10,493		10,783		11,278
Other lease expense	6,807		8,280		6,185
Total	$	28,570	$	31,098	$	28,868

Based on the nature of the ROU asset, amortization of finance lease ROU assets, operating lease expense and other lease expense are recorded within either cost of goods sold or selling and administrative expenses and interest on finance lease liabilities is recorded within interest expense on the Consolidated Statements of Comprehensive Income. Other lease expense includes lease expense for leases with an estimated total term of twelve months or less and variable lease expense related to variations in lease payments as a result of a change in factors or circumstances occurring after the lease possession date.

The following tables sets forth the amount of lease assets and lease liabilities included in the Company’s Consolidated Balance Sheets (in thousands):


	Financial Statement Line Item	2024		2023
ASSETS
Finance lease assets	Property, plant and equipment, net	$	35,853	$	37,391
Operating lease assets	Operating lease right-of-use assets	74,360		69,363
Total lease assets		$	110,213	$	106,754

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Finance lease liabilities	Current portion of long-term debt and finance lease obligations	$	4,717	$	4,034
Operating lease liabilities	Other accrued liabilities	14,697		8,363
Non-current
Finance lease liabilities	Long-term debt and finance lease obligations, net of current portion	38,756		39,271
Operating lease liabilities	Long-term operating lease liabilities	32,275		38,552
Total lease liabilities		$	90,445	$	90,220

Other information related to the Company’s leases was as follows:


	2024		2023
Weighted-average remaining lease term (in years)
Finance leases	9.8		10.6
Operating leases	25.4		16.0
Weighted-average discount rate
Finance leases	16.7	%	16.7	%
Operating leases	3.7	%	3.7	%


	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities (in thousands)
Operating cash flows used in finance leases	$	5,035	$	4,823	$	4,630
Operating cash flows used in operating leases	18,993		10,114		10,278
Finance cash flows used in finance leases	4,342		8,375		6,148
ROU assets obtained in exchange for lease liabilities (in thousands)
Operating leases	$	15,716	$	13,102	$	4,710
Finance leases	5,021		4,811		7,851

Future minimum lease payments required under finance and operating leases as of September 28, 2024, were as follows (in thousands):


	Operating leases		Finance leases
2025	$	16,092	$	9,882
2026	8,529		7,329
2027	6,777		17,209
2028	4,949		5,430
2029	3,265		4,914
Thereafter	13,623		65,316
Total minimum lease payments	53,235		110,080
Less: imputed interest	(6,263)		(66,607)
Present value of lease liabilities	$	46,972	$	43,473

As of September 28, 2024, the Company’s future operating leases that have not yet commenced are immaterial.