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LEASES

12 Months Ended

Dec. 25, 2022

LEASESThe 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 18 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, SG&A expense and Interest expense, net of capitalized interest in the Consolidated Statements of Income.


	For the Year Ended
	December 25, 2022		December 26, 2021
Operating lease cost(a)	$	98,353	$	93,024
Amortization of finance lease assets	472		745
Interest on finance leases	132		128
Short-term lease cost	77,100		63,588
Variable lease cost	4,102		4,490
Net lease cost	$	180,159	$	161,975

(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 25, 2022	December 26, 2021
Weighted-average remaining lease term (years):
Operating leases	5.80	6.07
Finance leases	4.52	5.32
Weighted-average discount rate:
Operating leases	4.00%	3.92%
Finance leases	3.19%	3.32%

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


	Year Ended
	December 25, 2022		December 26, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	69,349	$	77,113
Operating cash flows - finance leases	132		124
Financing cash flows - finance leases	924		76
Operating lease assets obtained in exchange for operating lease liabilities	$	56,988	$	144,028
Finance lease assets obtained in exchange for finance lease liabilities	—		3,527

Future minimum lease payments under noncancelable leases as of December 25, 2022 are as follows (in thousands):


	Operating Leases		Finance Leases
For the fiscal years ending December:
2023	$	90,356	$	1,064
2024	67,082		908
2025	55,911		563
2026	41,955		553
2027	29,697		526
Thereafter	60,182		253
Total future minimum lease payments	345,183		3,867
Less: imputed interest	(35,260)		(243)
Present value of lease liabilities	$	309,923	$	3,624

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


	December 25, 2022				December 26, 2021
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Accrued expenses and other current liabilities	$	79,222	$	—	$	82,947	$	—
Current maturities of long-term debt	—		966		—		930
Noncurrent operating lease liability, less current maturities	230,701		—		271,366		—
Long-term debt, less current maturities	—		2,658		—		3,618
Total lease liabilities	$	309,923	$	3,624	$	354,313	$	4,548

LEASES