LEASES

6 Months Ended

Apr. 03, 2020

Leases [Abstract]

Leases

LEASES

        On September 28, 2019, the Company adopted a new accounting standard that amends the guidance for the accounting and reporting of leases. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. The Company has operating and finance leases for office space, warehouse and manufacturing space, vehicles and certain equipment. The Company's lease agreements do not contain any material residual value guarantees, variable lease costs, bargain purchase options or restrictive covenants. The Company does not have any lease transactions with related parties. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. The Company's leases have remaining lease terms of one year to approximately five years, some of which may include options to extend the leases for up to six years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised.

        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 contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, our incremental borrowing rate is based on a credit-adjusted risk-free rate, which best approximates a secured rate over a similar term of lease.

        The following table presents supplemental balance sheet information related to the Company's operating and finance leases:

		April 3, 2020
(In millions)	Balance Sheet Location	Operating Leases		Finance Leases
Assets
Operating lease right-of-use assets	Operating lease assets	$	29.0	$	—
Finance lease right-of-use assets	Property, plant and equipment, net	$	—	$	0.6
Liabilities
Operating lease liabilities (current)	Current operating lease liabilities	$	5.5	$	—
Finance lease liabilities (current)	Accrued liabilities and other current liabilities	$	—	$	0.3
Operating lease liabilities (non-current)	Operating lease liabilities	$	23.5	$	—
Finance lease liabilities (non-current)	Other long-term liabilities	$	—	$	0.4

        The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating and finance leases:

	April 3, 2020
	Operating Leases		Finance Leases
Weighted average remaining lease term (in years)	6.8		3.2
Weighted average discount rate	4.9	%	3.6	%

        The following table provides information related to the Company’s operating and finance leases:

(In millions)	Three Months Ended April 3, 2020		Six Months Ended April 3, 2020
Total operating lease costs (a)	$	1.9	$	4.0
Total finance lease costs	$	0.1	$	0.1
Operating cash flows from operating leases	$	2.1	$	4.1
Financing cash flows from finance leases	(0.1)		—
Total cash paid for amounts included in the measurement of lease liabilities	$	2.0	$	4.1

^(a) Includes variable and short-term lease expense, which were immaterial for the three and six months ended April 3, 2020.

For the three and six months ended March 29, 2019 the Company's lease expense was $1.4 million and $2.6 million, respectively.

        As of April 3, 2020, maturities of operating lease and finance lease liabilities for each of the following five years and a total thereafter were as follows:

(In millions)
Fiscal years:	Operating Leases		Finance Leases
2020 remaining	$	3.3	$	0.1
2021	6.5		0.2
2022	6.2		0.2
2023	3.7		0.1
2024	3.1		—
Thereafter	11.6		—
Total future lease payments	$	34.4	$	0.6
Less: imputed interest	(5.5)		—
Present value of lease liabilities	$	28.9	$	0.6

        At September 27, 2019, the Company was committed to minimum rentals under non-cancelable operating leases (including rent escalation clauses) for fiscal years 2020 through 2024 and thereafter, as follows: $7.5 million, $5.4 million, $4.7 million, $1.8 million, $0.9 million, and $0.2 million, respectively.  

During the second quarter of 2020, the Company identified an error related to the adoption of ASC 842, which was adopted as of September 28, 2019, and recorded adjustments of $2.3 million to the lease right-of-use asset balance and $2.8 million to the lease liability balance, which reduced these balances and also recorded an adjustment of $0.3 million to increase retained earnings. There was no material impact to the income statement for this correction. We evaluated the materiality of this error on our current quarter and prior quarter consolidated financial statements and have concluded that this error was not material when considering both qualitative and quantitative factors.

Leases

LEASES

        On September 28, 2019, the Company adopted a new accounting standard that amends the guidance for the accounting and reporting of leases. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. The Company has operating and finance leases for office space, warehouse and manufacturing space, vehicles and certain equipment. The Company's lease agreements do not contain any material residual value guarantees, variable lease costs, bargain purchase options or restrictive covenants. The Company does not have any lease transactions with related parties. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. The Company's leases have remaining lease terms of one year to approximately five years, some of which may include options to extend the leases for up to six years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised.

        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 contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, our incremental borrowing rate is based on a credit-adjusted risk-free rate, which best approximates a secured rate over a similar term of lease.

        The following table presents supplemental balance sheet information related to the Company's operating and finance leases:

		April 3, 2020
(In millions)	Balance Sheet Location	Operating Leases		Finance Leases
Assets
Operating lease right-of-use assets	Operating lease assets	$	29.0	$	—
Finance lease right-of-use assets	Property, plant and equipment, net	$	—	$	0.6
Liabilities
Operating lease liabilities (current)	Current operating lease liabilities	$	5.5	$	—
Finance lease liabilities (current)	Accrued liabilities and other current liabilities	$	—	$	0.3
Operating lease liabilities (non-current)	Operating lease liabilities	$	23.5	$	—
Finance lease liabilities (non-current)	Other long-term liabilities	$	—	$	0.4

        The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating and finance leases:

	April 3, 2020
	Operating Leases		Finance Leases
Weighted average remaining lease term (in years)	6.8		3.2
Weighted average discount rate	4.9	%	3.6	%

        The following table provides information related to the Company’s operating and finance leases:

(In millions)	Three Months Ended April 3, 2020		Six Months Ended April 3, 2020
Total operating lease costs (a)	$	1.9	$	4.0
Total finance lease costs	$	0.1	$	0.1
Operating cash flows from operating leases	$	2.1	$	4.1
Financing cash flows from finance leases	(0.1)		—
Total cash paid for amounts included in the measurement of lease liabilities	$	2.0	$	4.1

^(a) Includes variable and short-term lease expense, which were immaterial for the three and six months ended April 3, 2020.

For the three and six months ended March 29, 2019 the Company's lease expense was $1.4 million and $2.6 million, respectively.

        As of April 3, 2020, maturities of operating lease and finance lease liabilities for each of the following five years and a total thereafter were as follows:

(In millions)
Fiscal years:	Operating Leases		Finance Leases
2020 remaining	$	3.3	$	0.1
2021	6.5		0.2
2022	6.2		0.2
2023	3.7		0.1
2024	3.1		—
Thereafter	11.6		—
Total future lease payments	$	34.4	$	0.6
Less: imputed interest	(5.5)		—
Present value of lease liabilities	$	28.9	$	0.6

        At September 27, 2019, the Company was committed to minimum rentals under non-cancelable operating leases (including rent escalation clauses) for fiscal years 2020 through 2024 and thereafter, as follows: $7.5 million, $5.4 million, $4.7 million, $1.8 million, $0.9 million, and $0.2 million, respectively.  

During the second quarter of 2020, the Company identified an error related to the adoption of ASC 842, which was adopted as of September 28, 2019, and recorded adjustments of $2.3 million to the lease right-of-use asset balance and $2.8 million to the lease liability balance, which reduced these balances and also recorded an adjustment of $0.3 million to increase retained earnings. There was no material impact to the income statement for this correction. We evaluated the materiality of this error on our current quarter and prior quarter consolidated financial statements and have concluded that this error was not material when considering both qualitative and quantitative factors.