Leases

12 Months Ended

Sep. 25, 2022

LEASES

We lease certain real estate, vehicles, and equipment. Our leases have remaining lease terms of 1 to 40 years, some of which may include options to extend the leases, and some of which may include options to terminate the leases. The exercise of lease renewal options is at our sole discretion. The depreciable lives of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise.

During the period ended September 25, 2022, the Company permanently vacated office and distribution space related to 14 leases. The space was vacated as some of our locations have transitioned to long-term remote working arrangements and space consolidation. The abandonment of lease space is an indicator of impairment and the Company assessed the lease ROU asses and leasehold improvements for impairment. Estimates of fair value include Level 3 inputs which are subjective in nature and involve uncertainties and matters of significant judgement and are made at a specific point in time. During the period ended September 25, 2022, the Company recorded non-cash impairment losses of $7,815,000 for right-of-use assets, which is recorded on the Income Statement under the line item assets loss (gain) on sales, impairments and other.

Total lease expense consists of the following:


(Thousands of Dollars)	2022	2021	2020
Operating lease costs	13,786	14,846	10,148
Variable lease costs	1,201	92	1,911
Short-term lease costs	217	—	426
Total Operating Lease Expense	15,205	14,938	12,485

Supplemental cash flow information related to our operating leases was as follows:


(Thousands of Dollars)	2022	2021	2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	14,325	14,789	10,003
Right-of-use assets obtained in exchange for operating lease liabilities	990	932	1,630

As of September 25, 2022, maturities of lease liabilities were as follows:


(Thousands of Dollars)
2023			12,921
2024			11,871
2025			10,630
2026			9,187
2027			7,736
Thereafter			18,799
Total lease payments			71,144
Less: interest			(17,282)
Present value of lease liabilities			53,862

Our lease contracts are discounted using the incremental borrowing rate for the Company. We determined the incremental borrowing rate based on a senior secured collateral adjusted yield curve for the Company. This yield curve reflects the estimated rate that would have been paid by the Company to borrow on a collateralized basis over a similar term in a similar economic environment. The weighted average revolving lease terms and discount rates for all of our operating leases were as follows.


	September 25, 2022
Weighted average remaining lease term (years)	6 years, 7 months, 2 days
Weighted Average discount rate	7.99	%