XML 165 R16.htm IDEA: XBRL DOCUMENT v3.24.3
LEASES
12 Months Ended
Sep. 27, 2024
Leases [Abstract]  
LEASES LEASES:
The Company has lease arrangements primarily related to real estate, vehicles and equipment, which generally have terms of one to 20 years. Finance leases primarily relate to vehicles. The Company assesses whether an arrangement is a lease, or contains a lease, upon inception of the related contract. A right-of-use asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”).
The Company recognizes operating lease liabilities and operating lease right-of-use assets on its Consolidated and Combined Balance Sheets. Operating lease right-of-use assets represent the Company’s right to use the underlying assets for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from
the lease. Operating lease liabilities and operating lease right-of-use assets are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. Deferred rent, tenant improvement allowances and prepaid rent are included in the operating lease right-of-use asset balances. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has lease agreements with lease and non-lease components. Non-lease components are combined with the related lease components and accounted for as lease components for all classes of underlying assets.
Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance costs and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized in the period in which the expenses are incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain they will be exercised or not, respectively. Options to extend lease terms that are reasonably certain of exercise are recognized as part of the operating lease right-of-use asset and operating lease liability balances.
The Company is required to discount its future minimum lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. As the Company’s leases typically do not provide an implicit rate, the present value of our lease liability is determined using an incremental borrowing rate based on the information available as of the lease commencement date.
The following table summarizes the location of the operating and finance leases in the Company’s Consolidated and Combined Balance Sheets (in thousands), as well as the weighted average remaining lease term and weighted average discount rate:
LeasesBalance Sheet LocationSeptember 27, 2024September 29, 2023
Assets:
OperatingOperating Lease Right-of-use Assets$73,530 $57,890 
FinanceProperty and Equipment, net131,041 121,930 
Total lease assets$204,571 $179,820 
Liabilities:
Current
OperatingCurrent operating lease liabilities$19,886 $19,935 
FinanceCurrent maturities of financing lease obligations31,347 27,659 
Noncurrent
OperatingNoncurrent Operating Lease Liabilities66,111 46,084 
FinanceNoncurrent Financing Lease Obligations115,325 105,217 
Total lease liabilities$232,669 $198,895 
Weighted average remaining lease term (in years)
Operating leases6.14.7
Finance leases5.75.7
Weighted average discount rate
Operating leases6.1 %4.4 %
Finance leases4.6 %4.3 %
The following table summarizes the location of lease related costs in the Consolidated and Combined Statements of Income (in thousands):
Fiscal Year Ended
Lease CostIncome Statement LocationSeptember 27, 2024September 29, 2023September 30, 2022
Operating lease cost:
Fixed lease costsCost of services provided (exclusive of depreciation and amortization) / Selling, general and administrative expenses$23,359 $23,119 $25,376 
Variable lease costsCost of services provided (exclusive of depreciation and amortization) / Selling, general and administrative expenses10,447 9,888 9,114 
Short-term lease costsCost of services provided (exclusive of depreciation and amortization) / Selling, general and administrative expenses8,698 8,175 6,371 
Finance lease cost(1):
Amortization of right-of-use-assetsDepreciation and amortization31,647 30,360 29,135 
Interest on lease liabilitiesInterest Expense, net5,784 4,174 3,205 
Net lease cost$79,935 $75,716 $73,201 
__________________
(1)Excludes variable lease costs, which are immaterial.
Supplemental cash flow information related to leases for the period reported is as follows (in thousands):
Fiscal Year Ended
September 27, 2024September 29, 2023September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases(1)
$19,871 $24,208 $25,189 
Operating cash flows from finance leases5,784 4,174 3,205 
Financing cash flows from finance leases30,608 27,601 28,041 
Lease assets obtained in exchange for lease obligations:
Operating leases35,997 12,640 20,416 
Finance leases$44,916 $42,581 $28,895 
__________________
(1)For fiscal 2024, excludes cash paid for variable and short-term lease costs of $10.4 million and $8.7 million, respectively, that are not included within the measurement of lease liabilities. For fiscal 2023, excludes cash paid for variable and short-term lease costs of $9.9 million and $8.2 million, respectively, that are not included within the measurement of lease liabilities. For fiscal 2022, excludes cash paid for variable and short-term lease costs of $9.1 million and $6.4 million, respectively, that are not included within the measurement of lease liabilities. Additionally, for fiscal 2024, includes $4.5 million of cash received for reimbursements of tenant improvement allowances.
Future minimum lease payments under non-cancelable leases as of September 27, 2024 are as follows (in thousands):
Operating leasesFinance leasesTotal
2025$23,755 $37,246 $61,001 
202619,774 32,814 52,588 
202716,210 28,298 44,508 
202812,492 23,756 36,248 
20298,128 19,065 27,193 
Thereafter27,702 26,407 54,109 
Total future minimum lease payments$108,061 $167,586 $275,647 
Less: Interest(22,064)(20,914)(42,978)
Present value of lease liabilities$85,997 $146,672 $232,669 
LEASES LEASES:
The Company has lease arrangements primarily related to real estate, vehicles and equipment, which generally have terms of one to 20 years. Finance leases primarily relate to vehicles. The Company assesses whether an arrangement is a lease, or contains a lease, upon inception of the related contract. A right-of-use asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”).
The Company recognizes operating lease liabilities and operating lease right-of-use assets on its Consolidated and Combined Balance Sheets. Operating lease right-of-use assets represent the Company’s right to use the underlying assets for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from
the lease. Operating lease liabilities and operating lease right-of-use assets are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. Deferred rent, tenant improvement allowances and prepaid rent are included in the operating lease right-of-use asset balances. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has lease agreements with lease and non-lease components. Non-lease components are combined with the related lease components and accounted for as lease components for all classes of underlying assets.
Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance costs and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized in the period in which the expenses are incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain they will be exercised or not, respectively. Options to extend lease terms that are reasonably certain of exercise are recognized as part of the operating lease right-of-use asset and operating lease liability balances.
The Company is required to discount its future minimum lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. As the Company’s leases typically do not provide an implicit rate, the present value of our lease liability is determined using an incremental borrowing rate based on the information available as of the lease commencement date.
The following table summarizes the location of the operating and finance leases in the Company’s Consolidated and Combined Balance Sheets (in thousands), as well as the weighted average remaining lease term and weighted average discount rate:
LeasesBalance Sheet LocationSeptember 27, 2024September 29, 2023
Assets:
OperatingOperating Lease Right-of-use Assets$73,530 $57,890 
FinanceProperty and Equipment, net131,041 121,930 
Total lease assets$204,571 $179,820 
Liabilities:
Current
OperatingCurrent operating lease liabilities$19,886 $19,935 
FinanceCurrent maturities of financing lease obligations31,347 27,659 
Noncurrent
OperatingNoncurrent Operating Lease Liabilities66,111 46,084 
FinanceNoncurrent Financing Lease Obligations115,325 105,217 
Total lease liabilities$232,669 $198,895 
Weighted average remaining lease term (in years)
Operating leases6.14.7
Finance leases5.75.7
Weighted average discount rate
Operating leases6.1 %4.4 %
Finance leases4.6 %4.3 %
The following table summarizes the location of lease related costs in the Consolidated and Combined Statements of Income (in thousands):
Fiscal Year Ended
Lease CostIncome Statement LocationSeptember 27, 2024September 29, 2023September 30, 2022
Operating lease cost:
Fixed lease costsCost of services provided (exclusive of depreciation and amortization) / Selling, general and administrative expenses$23,359 $23,119 $25,376 
Variable lease costsCost of services provided (exclusive of depreciation and amortization) / Selling, general and administrative expenses10,447 9,888 9,114 
Short-term lease costsCost of services provided (exclusive of depreciation and amortization) / Selling, general and administrative expenses8,698 8,175 6,371 
Finance lease cost(1):
Amortization of right-of-use-assetsDepreciation and amortization31,647 30,360 29,135 
Interest on lease liabilitiesInterest Expense, net5,784 4,174 3,205 
Net lease cost$79,935 $75,716 $73,201 
__________________
(1)Excludes variable lease costs, which are immaterial.
Supplemental cash flow information related to leases for the period reported is as follows (in thousands):
Fiscal Year Ended
September 27, 2024September 29, 2023September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases(1)
$19,871 $24,208 $25,189 
Operating cash flows from finance leases5,784 4,174 3,205 
Financing cash flows from finance leases30,608 27,601 28,041 
Lease assets obtained in exchange for lease obligations:
Operating leases35,997 12,640 20,416 
Finance leases$44,916 $42,581 $28,895 
__________________
(1)For fiscal 2024, excludes cash paid for variable and short-term lease costs of $10.4 million and $8.7 million, respectively, that are not included within the measurement of lease liabilities. For fiscal 2023, excludes cash paid for variable and short-term lease costs of $9.9 million and $8.2 million, respectively, that are not included within the measurement of lease liabilities. For fiscal 2022, excludes cash paid for variable and short-term lease costs of $9.1 million and $6.4 million, respectively, that are not included within the measurement of lease liabilities. Additionally, for fiscal 2024, includes $4.5 million of cash received for reimbursements of tenant improvement allowances.
Future minimum lease payments under non-cancelable leases as of September 27, 2024 are as follows (in thousands):
Operating leasesFinance leasesTotal
2025$23,755 $37,246 $61,001 
202619,774 32,814 52,588 
202716,210 28,298 44,508 
202812,492 23,756 36,248 
20298,128 19,065 27,193 
Thereafter27,702 26,407 54,109 
Total future minimum lease payments$108,061 $167,586 $275,647 
Less: Interest(22,064)(20,914)(42,978)
Present value of lease liabilities$85,997 $146,672 $232,669