LEASES

12 Months Ended

Dec. 26, 2021

Leases [Abstract]

LEASES

LEASES

The Company is party to operating lease agreements for warehouses, office space, vehicle maintenance facilities and livestock growing farms in the U.S., distribution centers, hatcheries and office space in Mexico and farms, processing facilities and office space in the U.K. and Europe. Additionally, the Company leases equipment, over-the-road transportation vehicles and other assets in all three reportable segments. The Company is also party to a limited number of finance lease agreements in the U.S.

The Company’s leases have remaining lease terms of less than one year to 14 years, some of which may include options to extend the lease for up to ten years and some of which may include options to terminate the lease within one year. The exercise of options to extend lease terms is at the Company’s sole discretion. Certain leases also include options to purchase the leased property.

Certain lease agreements include rental payment increases over the lease term that can be either fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index are recognized as incurred. Certain lease agreements contain residual value guarantees, primarily vehicle and transportation equipment leases.

The following table presents components of lease expense (in thousands). Operating lease cost, finance lease amortization and finance lease interest are respectively included in Cost of sales, Selling, general and administrative expense and Interest expense, net of capitalized interest in the Consolidated Statements of Income.

	For the Year Ended
	December 26, 2021		December 27, 2020
Operating lease cost(a)	$	93,024	$	90,887
Amortization of finance lease assets	745		436
Interest on finance leases	128		99
Short-term lease cost	63,588		64,410
Variable lease cost	4,490		3,839
Net lease cost	$	161,975	$	159,671

(a)Sublease income is immaterial and not included in operating lease costs.

The weighted-average remaining lease term and discount rate for lease liabilities included in our Consolidated Balance Sheets are as follows:

	December 26, 2021	December 27, 2020
Weighted-average remaining lease term (years):
Operating leases	6.07	5.44
Finance leases	5.32	3.69
Weighted-average discount rate:
Operating leases	3.92%	4.53%
Finance leases	3.32%	5.08%

Supplemental cash flow information related to leases is as follows (in thousands):

	Year Ended
	December 26, 2021		December 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	77,113	$	91,254
Operating cash flows - finance leases	124		99
Financing cash flows - finance leases	76		486
Operating lease assets obtained in exchange for operating lease liabilities	$	144,028	$	60,776
Finance lease assets obtained in exchange for finance lease liabilities	3,527		—

Future minimum lease payments under noncancelable leases as of December 26, 2021 are as follows (in thousands):

	Operating Leases		Finance Leases
For the fiscal years ending December:
2022	$	102,390	$	1,064
2023	75,822		1,057
2024	60,196		908
2025	46,991		563
2026	34,034		554
Thereafter	71,230		779
Total future minimum lease payments	390,663		4,925
Less: imputed interest	(36,350)		(377)
Present value of lease liabilities	$	354,313	$	4,548

Lease liabilities are included in our Consolidated Balance Sheets as follows (in thousands):

	December 26, 2021				December 27, 2020
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Accrued expenses and other current liabilities	$	82,947	$	—	$	71,592	$	—
Current maturities of long-term debt	—		930		—		420
Noncurrent operating lease liability, less current maturities	271,366		—		217,432		—
Long-term debt, less current maturities	—		3,618		—		1,244
Total lease liabilities	$	354,313	$	4,548	$	289,024	$	1,664

LEASES

LEASES

The Company is party to operating lease agreements for warehouses, office space, vehicle maintenance facilities and livestock growing farms in the U.S., distribution centers, hatcheries and office space in Mexico and farms, processing facilities and office space in the U.K. and Europe. Additionally, the Company leases equipment, over-the-road transportation vehicles and other assets in all three reportable segments. The Company is also party to a limited number of finance lease agreements in the U.S.

The Company’s leases have remaining lease terms of less than one year to 14 years, some of which may include options to extend the lease for up to ten years and some of which may include options to terminate the lease within one year. The exercise of options to extend lease terms is at the Company’s sole discretion. Certain leases also include options to purchase the leased property.

Certain lease agreements include rental payment increases over the lease term that can be either fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index are recognized as incurred. Certain lease agreements contain residual value guarantees, primarily vehicle and transportation equipment leases.

The following table presents components of lease expense (in thousands). Operating lease cost, finance lease amortization and finance lease interest are respectively included in Cost of sales, Selling, general and administrative expense and Interest expense, net of capitalized interest in the Consolidated Statements of Income.

	For the Year Ended
	December 26, 2021		December 27, 2020
Operating lease cost(a)	$	93,024	$	90,887
Amortization of finance lease assets	745		436
Interest on finance leases	128		99
Short-term lease cost	63,588		64,410
Variable lease cost	4,490		3,839
Net lease cost	$	161,975	$	159,671

(a)Sublease income is immaterial and not included in operating lease costs.

The weighted-average remaining lease term and discount rate for lease liabilities included in our Consolidated Balance Sheets are as follows:

	December 26, 2021	December 27, 2020
Weighted-average remaining lease term (years):
Operating leases	6.07	5.44
Finance leases	5.32	3.69
Weighted-average discount rate:
Operating leases	3.92%	4.53%
Finance leases	3.32%	5.08%

Supplemental cash flow information related to leases is as follows (in thousands):

	Year Ended
	December 26, 2021		December 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	77,113	$	91,254
Operating cash flows - finance leases	124		99
Financing cash flows - finance leases	76		486
Operating lease assets obtained in exchange for operating lease liabilities	$	144,028	$	60,776
Finance lease assets obtained in exchange for finance lease liabilities	3,527		—

Future minimum lease payments under noncancelable leases as of December 26, 2021 are as follows (in thousands):

	Operating Leases		Finance Leases
For the fiscal years ending December:
2022	$	102,390	$	1,064
2023	75,822		1,057
2024	60,196		908
2025	46,991		563
2026	34,034		554
Thereafter	71,230		779
Total future minimum lease payments	390,663		4,925
Less: imputed interest	(36,350)		(377)
Present value of lease liabilities	$	354,313	$	4,548

Lease liabilities are included in our Consolidated Balance Sheets as follows (in thousands):

	December 26, 2021				December 27, 2020
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Accrued expenses and other current liabilities	$	82,947	$	—	$	71,592	$	—
Current maturities of long-term debt	—		930		—		420
Noncurrent operating lease liability, less current maturities	271,366		—		217,432		—
Long-term debt, less current maturities	—		3,618		—		1,244
Total lease liabilities	$	354,313	$	4,548	$	289,024	$	1,664