Commitments and Contingencies
Operating Lease Liabilities and Assets
The Company owns most of the assets used in its operations, but leases certain buildings and land, vehicles, office equipment and other rental assets. The Company determines if an arrangement is a lease at inception. All of the Company’s current lease arrangements are classified as operating leases. The Company historically has not entered into financing leases. Operating lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease expense is recognized by amortizing the amount recorded as an asset on a straight-line basis over the lease term.
In determining lease asset value, the Company considers fixed or variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company generally uses its incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments.
Supplemental information related to the Company's lease activities were as follows (in thousands):
| | | | | | | | | | | |
| 2025 | | 2024 |
| Operating lease expense | $ | 12,243 | | | $ | 10,464 | |
| Operating lease payments | 11,330 | | | 9,752 | |
| Non-cash additions to operating lease assets | 6,395 | | | 511 | |
Additional information related to operating leases were as follows:
| | | | | | | | | | | |
| 2025 | | 2024 |
| Weighted average remaining lease term (years) | 3.2 | | 2.2 |
| Weighted average discount rate | 4.96 | % | | 3.76 | % |
Variable lease costs and short-term lease costs were not significant for the twelve months ended December 26, 2025 and December 27, 2024.
As of December 26, 2025, future maturities of operating lease liabilities were as follows (in thousands):
| | | | | |
| 2026 | $ | 8,769 | |
| 2027 | 9,491 | |
| 2028 | 5,616 | |
| 2029 | 2,906 | |
| 2030 | 1,382 | |
| Thereafter | 1,621 | |
| Total lease payments | $ | 29,785 | |
| Present value adjustment | (2,885) | |
| Operating lease liabilities | $ | 26,900 | |
Other Commitments. The Company is committed to pay suppliers under the terms of open purchase orders issued in the normal course of business totaling approximately $108 million at December 26, 2025. The Company also has commitments with certain suppliers to purchase minimum quantities, and under the terms of certain agreements, the Company is committed for certain portions of the supplier’s inventory. The Company does not purchase, or commit to purchase, quantities in excess of normal usage or amounts that cannot be used within one year. The Company estimates that the maximum commitment amount under such agreements does not exceed $68 million.
The Company enters into contracts with vendors to receive services. Commitments under these service contracts with non-cancelable terms of more than one year totaled $18 million in 2026, $14 million in 2027, $8 million in 2028 and $4 million thereafter.
In addition, the Company could be obligated to perform under standby letters of credit totaling $2 million at December 26, 2025. The Company has also guaranteed the debt of its subsidiaries for up to $8 million. All debt of subsidiaries is reflected in the consolidated balance sheets.
Contingencies. The Company is party to various legal proceedings arising in the normal course of business. The Company is actively pursuing and defending these matters and has recorded an estimate of the probable costs where appropriate. Management does not expect that the resolution of these matters will have a material adverse effect on the Company, although the ultimate outcome cannot be determined based on available information.