Leases

12 Months Ended

Dec. 26, 2020

Leases of Lessee Disclosure [Text Block]

The Company leases certain equipment, vehicles, office space, and manufacturing and distribution facilities, and recognizes the associated lease expense on a straight-line basis over the lease term. Some leases include one or more options to renew, with renewal terms that can extend the lease term from one year to five years, or more. The exercise of lease renewal options is at the Company's discretion and renewal options that are reasonably certain to be exercised have been included in the lease term. The depreciable life 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. Certain lease agreements held by the Company include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In 2007, the Company completed construction of a manufacturing facility in Belgium. Costs related to the facility and equipment totaled $24.0 million and were financed through a sale lease-back transaction under two separate leases. The two leases are being accounted for as finance leases and have initial terms of 10 years and 15 years and interest rates of 5.1 percent. In 2010, the Company extended a lease on an additional building in Belgium that was previously accounted for as an operating lease. As a result of renegotiating the terms of the agreement, the lease was classified as finance and had an initial value of $3.8 million with an initial term of 10 years and an interest rate of 2.9 percent.

Components of lease expense were as follows:


	Year Ended
(In millions)	December 26, 2020		December 28, 2019
Operating lease cost (a) (b)	$	81.1	$	51.7

Amortization of right-of-use assets (a)	$	0.8	$	0.9
Interest on lease liabilities (c)	0.2		0.2
Finance lease cost	$	1.0	$	1.1

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(a)Included in selling, general and administrative expense and cost of products sold.

(b)Includes $2.8 million and $0.9 million related to short-term rent expense and variable rent expense, respectively.

(c)Included in interest expense.

Supplemental cash flow information related to leases is as follows:


	Year Ended
(In millions)	December 26, 2020		December 28, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(39.9)	$	(50.1)
Operating cash flows from finance leases	$	—	$	(0.2)
Financing cash flows from finance leases	$	(0.6)	$	(1.6)

Leased assets obtained in exchange for new operating lease liabilities	$	34.4	$	8.4

Supplemental information related to leases is as follows:


	As of
(In millions, except lease term and discount rate)	December 26, 2020			December 28, 2019
Operating leases
Operating lease right-of-use assets	$	97.9		$	84.1

Accrued liabilities	$	26.5		$	29.2
Operating lease liabilities	70.1			56.0
Total operating lease liabilities	$	96.6		$	85.2

Finance leases
Property, plant and equipment, at cost	$	19.7		$	17.9
Accumulated amortization	(12.2)			(10.3)
Property, plant and equipment, net	$	7.5		$	7.6

Current portion of finance lease obligations	$	1.4		$	1.3
Long-term finance lease obligations	1.9			2.3
Total finance lease liabilities	$	3.3		$	3.6

Weighted average remaining lease term
Operating leases	5.4 years			4.5 years
Finance leases	2.4 years			2.8 years

Weighted Average Discount Rate (a)
Operating leases	5.7		%	5.2		%
Finance leases	5.1		%	5.1		%

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(a)Calculated using Company's incremental borrowing rate.

Maturities of lease liabilities as of December 26, 2020 were as follows:


	As of
	December 26, 2020
(In millions)	Operating Leases		Finance Leases
2021	$	30.1	$	1.6
2022	21.1		1.9
2023	14.8		—
2024	10.2		—
2025	6.9		—
Thereafter	30.8		—
Total lease payments	113.9		3.5
Less imputed interest	(17.3)		(0.2)
Total	$	96.6	$	3.3

Rental expense for operating leases totaled $32.2 million and gross payments of financing leases totaled $2.5 million in fiscal year 2018.

As of December 26, 2020, the Company had $3.2 million of operating leases not yet commenced but are expected to commence in 2021 with a term of one year to five years.