Leases

3 Months Ended

Dec. 28, 2019

LEASES

We determine if an arrangement contains a lease at inception based on whether or not we have the right to control the asset during the contract period and other facts and circumstances. We are the lessee in a lease contract when we obtain the right to control the asset. Operating leases are included in other long-term assets, other accrued liabilities and other long-term liabilities in our Consolidated Balance Sheet. Right-of-use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded on our Consolidated Balance Sheet and are expensed on a straight-line basis over the lease term in our Consolidated Statement of Income. We determine the lease term by assuming the exercise of renewal options that are reasonably certain. Most leases have remaining lease terms of one to ten years, some of which include options to extend the lease terms one to five years or more.

As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The incremental borrowing rate is used in determining the present value of lease payments, unless an implicit rate is specified. When our contracts contain lease and non-lease components, we account for both components as a single lease component.

We have operating leases for facilities, vehicles and equipment. We also have financing leases for certain vehicles. Our lease agreements do not contain any material residual value guarantees, material bargain purchase options or material restrictive covenants. We have no material sublease arrangements with third parties or lease transactions with related parties.

During the three months ended December 28, 2019, rent expense was $2,818, primarily related to operating lease costs. Costs associated with short-term leases, variable rent and subleases were immaterial.

Supplemental balance sheet information related to leases is as follows:



	Classification	December 28, 2019		September 29, 2019
Assets
Operating leases	Other long-term assets	$	19,861	$	20,356
Finance leases	Other long-term assets ¹	1,304		1,436
Total leased assets		$	21,165	$	21,792

Liabilities
Current
Operating leases	Other accrued liabilities	$	7,233	$	7,447
Finance leases	Other accrued liabilities²	576		570
Non-current
Operating leases	Other long-term liabilities	12,628		12,909
Finance leases	Other long-term liabilities²	728		866
Total lease liabilities		$	21,165	$	21,792


¹	Assets held under capital leases were reclassified from property and equipment, net to other long-term assets as part of the adoption of the new lease standard.


²	Finance lease obligations were reclassified from long-term debt, less current maturities, net to other accrued liabilities and other long-term liabilities as part of the adoption of the new lease standard.

Supplemental cash flow information related to leases is as follows:



	Three Months Ended
	December 28, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,536
Operating cash flows from finance leases	17
Financing cash flows from finance leases	147

Operating leased assets obtained in exchange for new lease liabilities	$	1,116

The weighted average remaining lease terms and weighted average discount rates are as follows:



	December 28, 2019
Weighted average remaining lease term
Operating leases	4.4 years
Finance leases	2.2 years
Weighted average discount rate
Operating leases	3.3	%
Finance leases	5.0	%

Future lease payments under non-cancelable leases for the next five years and thereafter are as follows:



	December 28, 2019
	Operating Leases			Finance Leases
Remainder of 2020	$	6,352		$	458
2021	6,276			611
2022	3,662			290
2023	2,247			—
2024	1,489			—
2025	563			—
Thereafter	1,583			—
Total lease payments	22,172			1,359
Less imputed interest	(2,311		)	(55		)
Total reported lease liability	$	19,861		$	1,304

As of December 28, 2019, we have no material additional operating or finance leases that have not yet commenced.

Future minimum lease commitments under non-cancelable leases for the next five years and thereafter were as follows:



	September 28, 2019
	Operating Leases		Capital Leases
2020	$	7,149	$	570
2021	5,291		588
2022	3,124		278
2023	1,602		—
2024	1,085		—
Thereafter	1,789		—
Total	$	20,040	$	1,436

Leases