Right-of-use (“ROU”) assets and lease liabilities balances were as follows (in thousands):


	October 3, 2026		January 3, 2026
Assets:
Operating lease right-of-use assets	$	1,867,121	$	1,500,786
Finance lease right-of-use assets		2,709		3,394
Total lease right-of-use assets	$	1,869,830	$	1,504,180
Liabilities—current:
Operating lease liabilities	$	137,097	$	146,594
Finance lease liabilities		1,059		1,022
Total current lease liabilities		138,156		147,616
Liabilities—long-term:
Operating lease liabilities		1,837,689		1,447,524
Finance lease liabilities		2,012		2,741
Total long-term lease liabilities		1,839,701		1,450,265
Total lease liabilities	$	1,977,857	$	1,597,881

Finance lease ROU assets are included in other assets and finance lease liabilities are included in other current liabilities and other long-term liabilities on the unaudited condensed consolidated balance sheets. Refer to Note 10, Fair Value Measurements, for information regarding impairment of ROU assets.

In August 2026, the Company entered into an Amended and Restated Fifth Amendment ("A&R Fifth Amendment") to the Master Lease Agreement dated August 1, 2015, as amended ("Lease Agreement") with landlord KCP RE LLC, relating to 545 early childhood education centers. Under the A&R Fifth Amendment, the lease terms for a majority of the centers were extended. The Company accounted for the A&R Fifth Amendment as a lease modification during the third quarter of the fiscal year ending January 2, 2027, which resulted in a $386.8 million increase in operating lease right-of-use assets and operating lease liabilities. Additionally, as a result of the modification, undiscounted future lease payments under non-cancellable leases increased $598.7 million over the extended lease terms and by $380.5 million for option years reasonably certain to be exercised.

The components of lease expense were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	October 3, 2026		September 27, 2025		October 3, 2026		September 27, 2025
Lease expense:
Operating lease expense	$	80,588	$	75,912	$	238,064	$	223,494
Finance lease expense:
Amortization of right-of-use assets		257		259		768		940
Interest on lease liabilities		67		74		218		249
Short-term lease expense		2,997		2,620		7,580		8,618
Variable lease expense		19,056		19,594		63,559		56,465
Total lease expense	$	102,965	$	98,459	$	310,189	$	289,766

The weighted average remaining lease term and the weighted average discount rate were as follows:


	October 3, 2026			January 3, 2026
Weighted average remaining lease term (in years) (Operating)		13			9
Weighted average remaining lease term (in years) (Finance)		4			5
Weighted average discount rate (Operating)		8.6	%		9.2	%
Weighted average discount rate (Finance)		8.3	%		8.6	%

The following table summarizes the maturity of lease liabilities as of October 3, 2026 (in thousands):


	Finance Leases		Operating Leases		Total Leases
Remainder of 2026	$	314	$	58,921	$	59,235
2027		1,236		318,024		319,260
2028		709		299,716		300,425
2029		433		280,337		280,770
2030		403		259,265		259,668
Thereafter		445		2,084,867		2,085,312
Total lease payments		3,540		3,301,130		3,304,670
Less imputed interest		469		1,326,344		1,326,813
Present value of lease liabilities		3,071		1,974,786		1,977,857
Less current portion of lease liabilities		1,059		137,097		138,156
Long-term lease liabilities	$	2,012	$	1,837,689	$	1,839,701

As of October 3, 2026, the Company had entered into additional operating leases that have not yet commenced with total fixed payment obligations of $236.1 million. The leases are expected to commence between 2026 and 2029 and have initial lease terms ranging from approximately 15 to 18 years.

The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The rates are estimated using key inputs such as credit ratings, base rates, and spreads, which considered the rates on the Company's first lien term loan.