Leases
An agreement is considered a lease when it gives the Company the right to substantially all of the economic benefits from an identified asset and the ability to direct its use throughout the term of the agreement. The Company has operating lease agreements for administrative, research and development, manufacturing, and sales and marketing facilities. These leases have remaining lease terms ranging from under one year to 19 years, some of which include options to extend or terminate the leases. The Company considered these options to the extent that they were reasonably certain to be exercised in determining the lease term used to establish its right-of-use assets and lease liabilities. Certain leases are subject to annual escalations as specified in the lease agreements. These lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company elected the practical expedient related to treating lease and non-lease components as a single lease component for all of its leases and elected a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the right-of-use assets and lease liabilities. Our lease right-of-use assets are tested for impairment in accordance with ASC 360.
In the year ended January 2, 2026, the Company recorded $4,772 impairment charges on its operating lease right-of-use assets, which is reflected within intangible and long-lived asset impairment in the consolidated statement of operations.
As most of the Company’s leases do not provide an interest rate, the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted-average remaining lease term for the Company’s operating leases was 8.64 years, and the weighted-average incremental borrowing rate was 4.30% as of January 2, 2026.
Operating lease costs consisted of the following:
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| For the fiscal years ended |
| January 2, 2026 | | January 3, 2025 | | December 29, 2023 |
| Operating lease cost | $ | 22,500 | | | $ | 21,467 | | | $ | 15,656 | |
| Other lease costs (1) | 5,806 | | | 4,443 | | | 3,846 | |
| Total lease costs | $ | 28,306 | | | $ | 25,910 | | | $ | 19,502 | |
| | | | | |
| (1) Includes short-term leases and variable lease costs. The Company elected a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the right-of-use assets and lease liabilities. |
Supplemental balance sheet information related to the Company’s operating leases is as follows:
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| Balance Sheet Classification | | January 2, 2026 |
| Operating lease right-of-use assets | Lease right-of-use assets | | $ | 99,002 | |
| Current lease liabilities | Accrued expenses | | $ | 16,221 | |
| Non-current lease liabilities | Other liabilities | | $ | 89,791 | |
Maturities of lease liabilities by fiscal year for the Company’s operating leases are as follows:
| | | | | |
| For fiscal year | Total future payments |
| 2026 | $ | 20,425 | |
| 2027 | 17,197 | |
| 2028 | 16,803 | |
| 2029 | 14,977 | |
| 2030 | 12,843 | |
| Thereafter | 46,617 | |
| Total lease payments | 128,862 | |
| Less: imputed interest | (22,850) | |
| Present value of lease liabilities | 106,012 | |
| Less: current portion | (16,221) | |
| Lease liabilities less current portion | $ | 89,791 | |
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.