Leases

6 Months Ended

Jun. 26, 2020

Leases [Abstract]

Leases of Lessee Disclosure

Leases

The Company leases warehouse and manufacturing real estate, and manufacturing and computer equipment under operating leases with lease terms ranging up to 25 years. Several operating lease agreements contain options to extend the lease term and/or options for early termination. The lease term consists of the non-cancelable period of the lease, periods covered by options to extend the lease if the Company is reasonably certain to exercise the option, and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the option. The weighted average remaining lease term for the Company's operating and finance leases as of June 26, 2020 was 13.57 years and 19.37 years, respectively.

The discount rate implicit within the leases is generally not determinable, and, therefore, the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for leases is determined based on the lease term in which lease payments are made, adjusted for impacts of collateral. The weighted average discount rate used to measure the Company's operating and finance lease liabilities as of June 26, 2020 was 6.41% and 5.31%, respectively.

The components of operating and finance lease cost for the second quarter and first six months of 2020 and 2019 were as follows:

	Second Quarter Ended				Six Months Ended
(Thousands)	June 26, 2020		June 28, 2019		June 26, 2020		June 28, 2019
Components of lease expense
Operating lease cost	$	2,274	$	2,291	$	4,532	$	5,003
Finance lease cost
Amortization of right-of-use assets	350		354		701		710
Interest on lease liabilities	238		259		482		522
Total lease cost	$	2,862	$	2,904	$	5,715	$	6,235

Operating lease expense amounted to $2.3 million and $4.5 million during the second quarter and first six months of 2020, respectively, compared to $2.3 million and $5.0 million, respectively, during the same periods of 2019. The Company straight-lines its expense of fixed payments for operating leases over the lease term and expenses the variable lease payments in the period incurred. These variable lease payments are not included in the calculation of right-of-use assets or lease liabilities.

Supplemental balance sheet information related to the Company's operating and finance leases as of June 26, 2020 and December 31, 2019 was as follows:

	June 26,		Dec. 31,
(Thousands)	2020		2019
Supplemental balance sheet information
Operating Leases
Operating lease right-of-use assets	$	48,942	$	23,413
Other liabilities and accrued items	5,298		6,542
Operating lease liabilities	44,830		18,091
Finance Leases
Property, plant, and equipment	$	26,258	$	26,069
Allowances for depreciation, depletion, and amortization	(4,035)		(3,570)
Finance lease assets, net	$	22,223	$	22,499
Other liabilities and accrued items	$	1,305	$	1,265
Finance lease liabilities	16,939		17,424
Total principal payable on finance leases	$	18,244	$	18,689

Future maturities of the Company's lease liabilities as of June 26, 2020 are as follows:

	Finance		Operating
(Thousands)	Leases		Leases
2020	$	1,119	$	3,986
2021	2,238		7,841
2022	2,238		6,846
2023	1,528		6,548
2024	1,174		4,704
2025 and thereafter	21,126		46,967
Total lease payments	29,423		76,892
Less amount of lease payment representing interest	11,179		26,764
Total present value of lease payments	$	18,244	$	50,128

Supplemental cash flow information related to leases for the first six months of 2020 and 2019 were as follows:

	Six Months Ended
(Thousands)	June 26, 2020		June 28, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	7,275	$	7,710
Operating cash flows from finance leases	482		522
Financing cash flows from finance leases	626		599