Lease Commitments

12 Months Ended

Dec. 29, 2019

We determine if an arrangement is a lease at inception. Effective December 31, 2018, operating leases are recorded as right-of-use assets, other long-term lease liabilities and current accrued liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, current accrued liabilities, and other long-term liabilities in our consolidated balance sheets.

Operating lease 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. Operating lease right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term and use an implicit rate when readily available. Since most of our leases do not provide an implicit rate, we use the incremental borrowing rate to determine the present value of lease payments. The rate will take into consideration the underlying asset’s economic environment, including the length of the lease term and currency that the lease is payable in. Our lease agreements may include options to extend the lease term. We include those options to extend the lease term in determining the present value of the future lease payments when it is reasonably certain that we will exercise such option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Many lease agreements contain renewal options at either a fixed cost, fixed increase or market value adjustment. For those leases with renewal options, we will include the renewal options that are reasonably certain to be exercised for purposes of calculating the lease liability and corresponding right-of-use asset. We evaluate the likelihood of exercising each renewal option based on many factors, including the length of the renewal option and the future new lease cost, if known, or the estimated future new lease cost if it is not a fixed amount.

Operating Leases

Teledyne has approximately 125 long-term operating lease agreements for manufacturing facilities and office space. These agreements frequently include one or more renewal options and may require the Company to pay for non-lease components such as utilities, taxes, insurance and maintenance expense. We account for lease and non-lease components as a single lease component when the payments are fixed. Variable payments included in the lease agreement are expensed as incurred. No lease agreement imposes a restriction on the Company’s ability to engage in financing transactions or enter into further lease agreements. At December 29, 2019, Teledyne has right-of-use assets of $127.1 million.

At December 29, 2019, future minimum lease payments for operating leases with non-cancelable terms of more than one year were as follows (in millions):


Operating lease commitments:
2020	$	24.5
2021	23.0
2022	19.7
2023	16.9
2024	15.1
Thereafter	70.1
Total minimum lease payments	169.3
Less:
Imputed interest	(30.4)
Current portion (included in other current liabilities)	(19.6)
Present value of minimum lease payments, net of current portion	$	119.3

The weighted average remaining lease term for operating leases is approximately 9 years and the weighted average discount rate is 4.05%. Rental expense under operating leases, including leases with a term of 12 months or less, net of immaterial sublease income, was $26.5 million in 2019, $30.7 million in 2018 and $26.9 million in 2017.

Finance Leases and Subleases

Our finance leases and subleases are not material.