XML 23 R20.htm IDEA: XBRL DOCUMENT

LEASES

3 Months Ended

Jan. 26, 2020

The Company has operating leases for manufacturing facilities, office space, warehouses, transportation equipment, and miscellaneous real estate and equipment contracts. Finance leases primarily include turkey growing facilities and an aircraft. The Company's lessor portfolio consists primarily of immaterial operating leases of farm land to third parties.

The Company determines if an arrangement contains a lease at inception. Right-of-use assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at the commencement date. Leases with an initial term of twelve months or less are not recorded on the Consolidated Statements of Financial Position. The Company combines lease and non-lease components together in determining the minimum lease payments for all leases.

The length of the lease term used in recording right-of-use assets and lease liabilities is based on the contractually required lease term adjusted for any options to renew, early terminate, or purchase the lease that are reasonably certain of being exercised. Most leases include one or more options to renew or terminate. The exercise of lease renewal and termination options is at the Company’s discretion and generally is not reasonably certain at lease commencement. The Company’s lease agreements typically do not contain material residual value guarantees. The Company has one lease with an immaterial residual value guarantee that is included in the minimum lease payments.

Certain lease agreements include rental payment increases over the lease term that can be fixed or variable. Fixed payment increases and variable payment increases based on an index or rate are included in the initial lease liability using the index or rate at commencement date. Variable payment increases not based on an index or rate are recognized as incurred.

If the rate implicit in the lease is not readily determinable, the Company used its periodic incremental borrowing rate, based on the information available at commencement date, to determine the present value of future lease payments. For the initial implementation of ASU 2016-02, Leases (Topic 842) the incremental borrowing rate on October 28, 2019, was used to determine the present value of existing operating right-of-use assets and lease liabilities.

Supplemental balance sheet information related to leases as of January 26, 2020, are as follows:



(in thousands)	Location on Consolidated Statements of Financial Position	January 26, 2020
Right-of-Use Assets
Operating	Other Assets	$	60,226
Finance	Net Property, Plant and Equipment	67,126
Total Right-of-Use Assets		$	127,352
Liabilities
Current
Operating	Accrued Expenses	$	13,728
Finance	Current Maturities of Long-Term Debt	8,259
Noncurrent
Operating	Other Long-Term Liabilities	48,561
Finance	Long-Term Debt - Less Current Maturities	58,972
Total Lease Liabilities		$	129,520

Lease expenses for the three months ended January 26, 2020, are as follows:



(in thousands)	January 26, 2020
Operating Lease Cost ⁽¹⁾	$	5,124
Finance Lease Cost
Amortization of Right-of-Use Assets	1,999
Interest on Lease Liabilities	605
Variable Lease Cost ⁽²⁾	102,668
Net Lease Cost	$	110,396


⁽¹⁾	Includes short-term lease costs, which are immaterial.

⁽²⁾

ASC 842 - Leases requires disclosure of payments related to agreements with an embedded lease that are not otherwise reflected on the balance sheet. The Company's variable lease costs primarily include inventory related expenses, such as materials, labor, and overhead, from manufacturing and service agreements that contain embedded leases. Variability of these costs is determined based on usage or output and may vary for other reasons such as changes in material prices.

The weighted-average remaining lease term and discount rate for lease liabilities included in the Consolidated Statements of Financial Position as of January 26, 2020, are as follows:



	January 26, 2020
Weighted Average Remaining Lease Term
Operating Leases	7.57 years
Finance Leases	8.83 years
Weighted Average Discount Rate
Operating Leases	2.30	%
Finance Leases	3.58	%

Supplemental cash flow and other information related to leases for the three months ended January 26, 2020, are as follows:



(in thousands)	January 26, 2020
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating Cash Flows from Operating Leases	$	3,057
Operating Cash Flows from Finance Leases	605
Financing Cash Flows from Finance Leases	2,019

The maturity of the Company's lease liabilities as of January 26, 2020, are as follows:



(in thousands)	Operating Leases ⁽¹⁾		Finance Leases ⁽²⁾		Total
2020 (nine months remaining)	$	11,691	$	7,891	$	19,582
2021	11,653		10,338		21,991
2022	9,139		9,934		19,072
2023	8,157		9,738		17,895
2024	5,730		9,612		15,341
2025	3,396		8,117		11,513
2026 and beyond	18,644		21,192		39,836
Total Lease Payments	$	68,410	$	76,821	$	145,231
Less: Imputed Interest	6,120		9,591		15,711
Present Value of Lease Liabilities	$	62,290	$	67,230	$	129,520


⁽¹⁾	Operating lease payments exclude $3.6 million of legally binding minimum lease payments for leases signed but not yet commenced.

⁽²⁾

Over the life of the lease contracts, finance lease payments include $8.9 million related to purchase options which are reasonably certain of being exercised.

LEASES

Supplemental balance sheet information related to leases as of January 26, 2020, are as follows:



(in thousands)	Location on Consolidated Statements of Financial Position	January 26, 2020
Right-of-Use Assets
Operating	Other Assets	$	60,226
Finance	Net Property, Plant and Equipment	67,126
Total Right-of-Use Assets		$	127,352
Liabilities
Current
Operating	Accrued Expenses	$	13,728
Finance	Current Maturities of Long-Term Debt	8,259
Noncurrent
Operating	Other Long-Term Liabilities	48,561
Finance	Long-Term Debt - Less Current Maturities	58,972
Total Lease Liabilities		$	129,520

Lease expenses for the three months ended January 26, 2020, are as follows:



(in thousands)	January 26, 2020
Operating Lease Cost ⁽¹⁾	$	5,124
Finance Lease Cost
Amortization of Right-of-Use Assets	1,999
Interest on Lease Liabilities	605
Variable Lease Cost ⁽²⁾	102,668
Net Lease Cost	$	110,396


⁽¹⁾	Includes short-term lease costs, which are immaterial.

⁽²⁾

The weighted-average remaining lease term and discount rate for lease liabilities included in the Consolidated Statements of Financial Position as of January 26, 2020, are as follows:



	January 26, 2020
Weighted Average Remaining Lease Term
Operating Leases	7.57 years
Finance Leases	8.83 years
Weighted Average Discount Rate
Operating Leases	2.30	%
Finance Leases	3.58	%

Supplemental cash flow and other information related to leases for the three months ended January 26, 2020, are as follows:



(in thousands)	January 26, 2020
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating Cash Flows from Operating Leases	$	3,057
Operating Cash Flows from Finance Leases	605
Financing Cash Flows from Finance Leases	2,019

The maturity of the Company's lease liabilities as of January 26, 2020, are as follows:



(in thousands)	Operating Leases ⁽¹⁾		Finance Leases ⁽²⁾		Total
2020 (nine months remaining)	$	11,691	$	7,891	$	19,582
2021	11,653		10,338		21,991
2022	9,139		9,934		19,072
2023	8,157		9,738		17,895
2024	5,730		9,612		15,341
2025	3,396		8,117		11,513
2026 and beyond	18,644		21,192		39,836
Total Lease Payments	$	68,410	$	76,821	$	145,231
Less: Imputed Interest	6,120		9,591		15,711
Present Value of Lease Liabilities	$	62,290	$	67,230	$	129,520


⁽¹⁾	Operating lease payments exclude $3.6 million of legally binding minimum lease payments for leases signed but not yet commenced.

⁽²⁾

Over the life of the lease contracts, finance lease payments include $8.9 million related to purchase options which are reasonably certain of being exercised.

LEASES

Supplemental balance sheet information related to leases as of January 26, 2020, are as follows:



(in thousands)	Location on Consolidated Statements of Financial Position	January 26, 2020
Right-of-Use Assets
Operating	Other Assets	$	60,226
Finance	Net Property, Plant and Equipment	67,126
Total Right-of-Use Assets		$	127,352
Liabilities
Current
Operating	Accrued Expenses	$	13,728
Finance	Current Maturities of Long-Term Debt	8,259
Noncurrent
Operating	Other Long-Term Liabilities	48,561
Finance	Long-Term Debt - Less Current Maturities	58,972
Total Lease Liabilities		$	129,520

Lease expenses for the three months ended January 26, 2020, are as follows:



(in thousands)	January 26, 2020
Operating Lease Cost ⁽¹⁾	$	5,124
Finance Lease Cost
Amortization of Right-of-Use Assets	1,999
Interest on Lease Liabilities	605
Variable Lease Cost ⁽²⁾	102,668
Net Lease Cost	$	110,396


⁽¹⁾	Includes short-term lease costs, which are immaterial.

⁽²⁾

The weighted-average remaining lease term and discount rate for lease liabilities included in the Consolidated Statements of Financial Position as of January 26, 2020, are as follows:



	January 26, 2020
Weighted Average Remaining Lease Term
Operating Leases	7.57 years
Finance Leases	8.83 years
Weighted Average Discount Rate
Operating Leases	2.30	%
Finance Leases	3.58	%

Supplemental cash flow and other information related to leases for the three months ended January 26, 2020, are as follows:



(in thousands)	January 26, 2020
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating Cash Flows from Operating Leases	$	3,057
Operating Cash Flows from Finance Leases	605
Financing Cash Flows from Finance Leases	2,019

The maturity of the Company's lease liabilities as of January 26, 2020, are as follows:



(in thousands)	Operating Leases ⁽¹⁾		Finance Leases ⁽²⁾		Total
2020 (nine months remaining)	$	11,691	$	7,891	$	19,582
2021	11,653		10,338		21,991
2022	9,139		9,934		19,072
2023	8,157		9,738		17,895
2024	5,730		9,612		15,341
2025	3,396		8,117		11,513
2026 and beyond	18,644		21,192		39,836
Total Lease Payments	$	68,410	$	76,821	$	145,231
Less: Imputed Interest	6,120		9,591		15,711
Present Value of Lease Liabilities	$	62,290	$	67,230	$	129,520


⁽¹⁾	Operating lease payments exclude $3.6 million of legally binding minimum lease payments for leases signed but not yet commenced.

⁽²⁾

Over the life of the lease contracts, finance lease payments include $8.9 million related to purchase options which are reasonably certain of being exercised.