LEASES
The Company leases certain real and personal property under non-cancelable operating leases. In addition, the Company leases a large portion of the Company’s fleet of tractors, all of its rail cars, some IT equipment and other transportation equipment. 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. In addition, the Company’s other variable lease payments are not significant.
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):
| | | | | | | | | | | |
| Year Ended |
| January 3, 2026 | December 28, 2024 | December 30, 2023 |
| Operating lease expense | $ | 70,452 | | $ | 64,848 | | $ | 56,078 | |
| Short-term lease costs | 34,434 | | 36,363 | | 36,762 | |
| Total lease cost | $ | 104,886 | | $ | 101,211 | | $ | 92,840 | |
Other information (in thousands, except lease terms and discount rates):
| | | | | | | | | | | |
| Year Ended |
| January 3, 2026 | December 28, 2024 | December 30, 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash flows from operating leases | $ | 71,792 | | $ | 65,840 | | $ | 58,924 | |
| | | |
| Operating right-of-use assets, net | $ | 223,705 | | $ | 210,692 | | |
| | | |
| Operating lease liabilities, current | $ | 61,745 | | $ | 62,761 | | |
| Operating lease liabilities, non-current | 162,362 | | 152,327 | | |
| Total operating lease liabilities | $ | 224,107 | | $ | 215,088 | | |
| | | |
| Weighted average remaining lease term - operating leases | 5.34 years | 5.74 years | |
| Weighted average discount rate - operating leases | 5.03 | % | 4.87 | % | |
Future annual minimum lease payments and finance lease commitments as of January 3, 2026 were as follows (in thousands):
| | | | | | | | |
| Period Ending Fiscal | Operating Leases | Finance Leases |
| 2026 | $ | 68,437 | | $ | 2,074 | |
| 2027 | 59,327 | | 1,756 | |
| 2028 | 47,371 | | 1,278 | |
| 2029 | 34,512 | | 875 | |
| 2030 | 15,403 | | 1 | |
| Thereafter | 25,305 | | — | |
| Total undiscounted lease payments | 250,355 | | 5,984 | |
| Less amounts representing interest | (26,248) | | (195) | |
| Lease obligations included in current and long-term liabilities | $ | 224,107 | | $ | 5,789 | |
The Company’s finance lease assets are included in property, plant and equipment and the finance lease obligations are included in the Company’s current and long-term debt obligations on the Consolidated Balance Sheet.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.