Leases

3 Months Ended

Apr. 05, 2020

Leases [Abstract]

Leases

LEASES

General

We have operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. Our leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

We record a right-of-use asset and lease liability for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of April 5, 2020, there were no significant right-of-use assets and lease obligations from leases that had not commenced as of the end of the first quarter.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheet related to our leases as of April 5, 2020:

	April 5, 2020				December 29, 2019
	(In thousands)
Balance Sheet Location	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Operating lease right-of-use assets	$	103,637			$	107,044
Current portion of operating lease liabilities	$	14,812			$	15,914
Operating lease liabilities	87,847				91,829
Total operating lease liabilities	$	102,659			$	107,743
Property and equipment			$	4,921			$	5,007
Accrued expenses			$	1,482			$	1,489
Other long-term liabilities			1,401				1,673
Total finance lease liabilities			$	2,883			$	3,162

Lease Costs

	Three Months Ended
	April 5, 2020		March 31, 2019
Lease cost	(In thousands)
Finance lease cost:
Amortization of right-of-use assets	$	300	$	146
Interest on lease liabilities	18		8
Operating lease cost	6,222		5,671
Short-term lease cost	175		738
Variable lease cost	646		145
Total lease cost	$	7,361	$	6,708
Other supplemental information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	18	$	8
Operating cash flows from operating leases	5,881		5,110
Financing cash flows from finance leases	399		246
Right-of-use assets obtained in exchange for new finance lease liabilities	213		—
Right-of-use assets obtained in exchange for new operating lease liabilities	977		2,467

	April 5, 2020		December 29, 2019
Weighted-average remaining lease term – finance leases (in years)	2.68		2.76
Weighted-average remaining lease term – operating leases (in years)	10.60		10.60
Weighted-average discount rate – finance leases	2.19	%	2.06	%
Weighted-average discount rate – operating leases	5.89	%	5.86	%

Maturity Analysis

Maturity analysis of lease payments under non-cancellable leases were as follows:

Fiscal Year	Operating Leases			Finance Leases
	(In thousands)
2020 (excluding first quarter of 2020)	$	15,659		$	1,166
2021	17,197			870
2022	13,758			522
2023	11,447			306
2024	9,918			110
Thereafter	74,449			—
Total future minimum lease payments (undiscounted)	142,428			2,974
Less: Present value discount	(39,769		)	(91		)
Total lease liability	$	102,659		$	2,883

Policy Elections

We made an accounting policy election not to separate lease and non-lease components for all asset classes, except for data center assets, and will account for the lease payments as a single component. We also made an accounting policy election to exclude leases with an initial term of 12 months or less from the calculation of the right-of-use asset and lease liability recorded on the consolidated condensed balance sheet. These leases primarily represent month-to-month operating leases for vehicles and office equipment where we were reasonably certain that we would not elect an option to extend the lease.

Leases

LEASES

General

We have operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. Our leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

We record a right-of-use asset and lease liability for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of April 5, 2020, there were no significant right-of-use assets and lease obligations from leases that had not commenced as of the end of the first quarter.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheet related to our leases as of April 5, 2020:

	April 5, 2020				December 29, 2019
	(In thousands)
Balance Sheet Location	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Operating lease right-of-use assets	$	103,637			$	107,044
Current portion of operating lease liabilities	$	14,812			$	15,914
Operating lease liabilities	87,847				91,829
Total operating lease liabilities	$	102,659			$	107,743
Property and equipment			$	4,921			$	5,007
Accrued expenses			$	1,482			$	1,489
Other long-term liabilities			1,401				1,673
Total finance lease liabilities			$	2,883			$	3,162

Lease Costs

	Three Months Ended
	April 5, 2020		March 31, 2019
Lease cost	(In thousands)
Finance lease cost:
Amortization of right-of-use assets	$	300	$	146
Interest on lease liabilities	18		8
Operating lease cost	6,222		5,671
Short-term lease cost	175		738
Variable lease cost	646		145
Total lease cost	$	7,361	$	6,708
Other supplemental information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	18	$	8
Operating cash flows from operating leases	5,881		5,110
Financing cash flows from finance leases	399		246
Right-of-use assets obtained in exchange for new finance lease liabilities	213		—
Right-of-use assets obtained in exchange for new operating lease liabilities	977		2,467

	April 5, 2020		December 29, 2019
Weighted-average remaining lease term – finance leases (in years)	2.68		2.76
Weighted-average remaining lease term – operating leases (in years)	10.60		10.60
Weighted-average discount rate – finance leases	2.19	%	2.06	%
Weighted-average discount rate – operating leases	5.89	%	5.86	%

Maturity Analysis

Maturity analysis of lease payments under non-cancellable leases were as follows:

Fiscal Year	Operating Leases			Finance Leases
	(In thousands)
2020 (excluding first quarter of 2020)	$	15,659		$	1,166
2021	17,197			870
2022	13,758			522
2023	11,447			306
2024	9,918			110
Thereafter	74,449			—
Total future minimum lease payments (undiscounted)	142,428			2,974
Less: Present value discount	(39,769		)	(91		)
Total lease liability	$	102,659		$	2,883

Policy Elections

We made an accounting policy election not to separate lease and non-lease components for all asset classes, except for data center assets, and will account for the lease payments as a single component. We also made an accounting policy election to exclude leases with an initial term of 12 months or less from the calculation of the right-of-use asset and lease liability recorded on the consolidated condensed balance sheet. These leases primarily represent month-to-month operating leases for vehicles and office equipment where we were reasonably certain that we would not elect an option to extend the lease.