Leases

9 Months Ended

Sep. 26, 2020

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The Company adopted the new standard on December 30, 2018 and is using the effective date as the Company's date of initial application and consequently, financial information will not be updated and the disclosures required under this ASU will not be provided for dates and periods before December 30, 2018. The Company has elected the package of expedients, which permits the Company not to reassess under the new standard the Company's prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to the Company.

The Company leases certain real and personal property, a large portion of the Company's fleet of tractors, all of its rail cars, some IT equipment and other transportation equipment under non-cancelable operating leases. The Company's office leases include certain lease and non-lease components, where the Company has elected to exclude the non-lease components from the calculation of the lease liability and ROU asset. The Company has finance leases, which are not significant to the Company and not separately disclosed in detail.

The components of operating lease expense included in cost of sales and operating expenses and selling, general and administrative expenses were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Operating lease expense	$	12,401	$	11,589	$	35,696	$	36,417
Short-term lease costs	6,904		4,903		18,729		10,653
Total lease cost	$	19,305	$	16,492	54,425		47,070

Other information (in thousands, except lease terms and discount rates):


	Nine Months Ended
	September 26, 2020			September 28, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	37,654		$	35,325

	September 26, 2020			December 28, 2019
Operating right-of-use assets, net	$	142,269		$	124,726

Operating lease liability, current	$	40,973		$	37,805
Operating lease liability, non-current	105,821			91,424
Total operating lease liabilities	$	146,794		$	129,229

Weighted average remaining lease term - operating leases	6.30 years			6.46 years
Weighted average discount rate - operating leases	4.22		%	4.55		%

Future annual minimum lease payments and capital lease commitments as of September 26, 2020 are as follows (in thousands):


Period Ending Fiscal	Operating Leases		Capital Leases
2020 (excluding the nine months ended September 26, 2020)	$	13,724	$	19
2021	41,068		16
2022	29,886		16
2023	25,085		10
2024	18,797		8
Thereafter	33,261		1
	$	161,821	$	70
Less amounts representing interest	$	(15,027)	(5)
Lease obligations included in current and long-term liabilities	$	146,794	$	65

As of September 26, 2020, the Company also has additional operating leases that have not yet commenced, primarily for rail car and tractors, with fixed payments over their noncancellable terms of $6.4 million. These operating leases will commence in 2020 and 2021 with noncancellable terms of 2 years to 10 years.

Leases

The components of operating lease expense included in cost of sales and operating expenses and selling, general and administrative expenses were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Operating lease expense	$	12,401	$	11,589	$	35,696	$	36,417
Short-term lease costs	6,904		4,903		18,729		10,653
Total lease cost	$	19,305	$	16,492	54,425		47,070

Other information (in thousands, except lease terms and discount rates):


	Nine Months Ended
	September 26, 2020			September 28, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	37,654		$	35,325

	September 26, 2020			December 28, 2019
Operating right-of-use assets, net	$	142,269		$	124,726

Operating lease liability, current	$	40,973		$	37,805
Operating lease liability, non-current	105,821			91,424
Total operating lease liabilities	$	146,794		$	129,229

Weighted average remaining lease term - operating leases	6.30 years			6.46 years
Weighted average discount rate - operating leases	4.22		%	4.55		%

Future annual minimum lease payments and capital lease commitments as of September 26, 2020 are as follows (in thousands):


Period Ending Fiscal	Operating Leases		Capital Leases
2020 (excluding the nine months ended September 26, 2020)	$	13,724	$	19
2021	41,068		16
2022	29,886		16
2023	25,085		10
2024	18,797		8
Thereafter	33,261		1
	$	161,821	$	70
Less amounts representing interest	$	(15,027)	(5)
Lease obligations included in current and long-term liabilities	$	146,794	$	65