Leases

3 Months Ended

Mar. 29, 2019

Leases [Abstract]

Leases

Leases

As of the first day of our 2019 fiscal year beginning December 29, 2018, we adopted ASU No. 2016-02, “Leases (Topic 842),” which requires leases with durations greater than twelve months to be recognized on the balance sheet using the modified retrospective approach. Prior year financial statements were not adjusted under the new standard and, therefore, those amounts are not presented below. We elected the package of transition provisions available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of lease payments over the term. Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate. We do not separate lease and nonlease components of contracts.

Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

We lease agricultural land and certain property, plant and equipment, including office facilities and refrigerated containers, under operating leases. We also enter into ship charter agreements for the transport of our fresh produce to markets worldwide. The lease term consists of the noncancellable period of the lease and the periods covered by options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain any residual value guarantees.

We have a related party lease for one of the Mann Packing subsidiaries for building rent. The expense incurred for the first quarter of 2019 was $0.5 million.

In Panama, we are developing a banana operation on leased land of which the remaining portion is pending delivery. Future lease payments will be $0.5 million annually for 40 years.

9 . Leases (continued)

Lease Position

The following table presents the lease-related assets and liabilities recorded on the balance sheet as of March 29, 2019 (U.S. dollars in millions):

Classification on the Balance Sheet		March 29, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	192.2
Finance lease assets	Property, plant and equipment, net	1.3
Total lease assets		$	193.5
Liabilities
Current
Operating	Current maturities of operating leases	$	56.0
Finance	Current maturities of long-term debt and finance leases	0.4
Noncurrent
Operating	Operating leases, less current maturities	109.5
Finance	Long-term debt and finance leases, less current maturities	0.5
Total lease liabilities		$	166.4
Weighted-average remaining lease term:
Operating leases		7.2 years
Finance leases		2.2 years
Weighted-average discount rate:
Operating leases (1)		8.41		%
Finance leases		4.42		%

(1) Upon adoption of the new lease standard, discount rates used for existing leases were established at December 29, 2018

Lease Costs

The following table presents certain information related to the lease costs for finance and operating leases for the quarter ended March 29, 2019 (U.S. dollars in millions):

	March 29, 2019
Finance lease cost
Amortization of lease assets	$	0.1
Operating lease cost	23.3
Short-term lease cost	2.4
Variable lease cost	1.3
Total lease cost	$	27.1

9 . Leases (continued)

Other Information

The following table presents supplemental cash flow information related to the leases for the quarter ended March 29, 2019 (U.S. dollars in millions):

	March 29, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	20.5
Financing cash flows for finance leases	0.1

The changes in the operating lease right-of-use assets and liability accounts recorded in connection with the recognition of operating lease expenses were $17.4 million and $14.6 million, respectively. These changes have been reflected within Other noncurrent asset and liabilities in our Consolidated Statement of Cash Flows.

Undiscounted Cash Flows

The following table reconciles the undiscounted cash flows for each of the first five years and total remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of March 29, 2019 (U.S. dollars in millions):

	Operating Leases		Finance Leases
Remainder of 2019	$	60.4	$	0.4
2020	38.3		0.3
2021	25.0		0.2
2022	17.7		—
2023	15.4		—
Thereafter	77.8		—
Total lease payments	234.6		0.9
Less: imputed interest	68.8		—
Total lease liabilities	$	165.5	$	0.9

Leases

Leases

As of the first day of our 2019 fiscal year beginning December 29, 2018, we adopted ASU No. 2016-02, “Leases (Topic 842),” which requires leases with durations greater than twelve months to be recognized on the balance sheet using the modified retrospective approach. Prior year financial statements were not adjusted under the new standard and, therefore, those amounts are not presented below. We elected the package of transition provisions available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of lease payments over the term. Many of our leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate. We do not separate lease and nonlease components of contracts.

Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

We lease agricultural land and certain property, plant and equipment, including office facilities and refrigerated containers, under operating leases. We also enter into ship charter agreements for the transport of our fresh produce to markets worldwide. The lease term consists of the noncancellable period of the lease and the periods covered by options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company's lease agreements do not contain any residual value guarantees.

We have a related party lease for one of the Mann Packing subsidiaries for building rent. The expense incurred for the first quarter of 2019 was $0.5 million.

In Panama, we are developing a banana operation on leased land of which the remaining portion is pending delivery. Future lease payments will be $0.5 million annually for 40 years.

9 . Leases (continued)

Lease Position

The following table presents the lease-related assets and liabilities recorded on the balance sheet as of March 29, 2019 (U.S. dollars in millions):

Classification on the Balance Sheet		March 29, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	192.2
Finance lease assets	Property, plant and equipment, net	1.3
Total lease assets		$	193.5
Liabilities
Current
Operating	Current maturities of operating leases	$	56.0
Finance	Current maturities of long-term debt and finance leases	0.4
Noncurrent
Operating	Operating leases, less current maturities	109.5
Finance	Long-term debt and finance leases, less current maturities	0.5
Total lease liabilities		$	166.4
Weighted-average remaining lease term:
Operating leases		7.2 years
Finance leases		2.2 years
Weighted-average discount rate:
Operating leases (1)		8.41		%
Finance leases		4.42		%

(1) Upon adoption of the new lease standard, discount rates used for existing leases were established at December 29, 2018

Lease Costs

The following table presents certain information related to the lease costs for finance and operating leases for the quarter ended March 29, 2019 (U.S. dollars in millions):

	March 29, 2019
Finance lease cost
Amortization of lease assets	$	0.1
Operating lease cost	23.3
Short-term lease cost	2.4
Variable lease cost	1.3
Total lease cost	$	27.1

9 . Leases (continued)

Other Information

The following table presents supplemental cash flow information related to the leases for the quarter ended March 29, 2019 (U.S. dollars in millions):

	March 29, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	20.5
Financing cash flows for finance leases	0.1

The changes in the operating lease right-of-use assets and liability accounts recorded in connection with the recognition of operating lease expenses were $17.4 million and $14.6 million, respectively. These changes have been reflected within Other noncurrent asset and liabilities in our Consolidated Statement of Cash Flows.

Undiscounted Cash Flows

The following table reconciles the undiscounted cash flows for each of the first five years and total remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of March 29, 2019 (U.S. dollars in millions):

	Operating Leases		Finance Leases
Remainder of 2019	$	60.4	$	0.4
2020	38.3		0.3
2021	25.0		0.2
2022	17.7		—
2023	15.4		—
Thereafter	77.8		—
Total lease payments	234.6		0.9
Less: imputed interest	68.8		—
Total lease liabilities	$	165.5	$	0.9