Leases (Notes)

9 Months Ended

Sep. 28, 2019

14)

Leases

Accounting Policy

On December 30, 2018, the company adopted the new accounting standard ASU No. 2016-02, "Leases" (ASC 842) using the modified retrospective method and elected to use the effective date as the date of initial application on transition. The company has elected the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs.

The adoption of ASC 842 represents a change in accounting principle that changes the way all leases with a duration of one year or more are treated. Under this guidance, lessees are required to capitalize virtually all leases on the balance sheet as a right-of-use asset and an associated financing lease liability or operating lease liability. The company determines if an arrangement is a lease at inception of a contract. Additionally, the guidance requires additional disclosure to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

The most material impact of the new standard is the recognition of new right-of-use (ROU) assets and lease liabilities on the Condensed Consolidated Balance Sheet for operating leases. Operating lease ROU assets are included in other assets and operating lease liabilities are included accrued expenses and other non-current liabilities. The lease liabilities are measured based upon the present value of minimum future payments and the ROU assets to be recognized will be equal to lease liabilities, adjusted for prepaid and accrued rent balances.

Leases

The company leases warehouse space, office facilities and equipment under operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The company's lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for these leases is recognized on a straight-line basis over the term of the lease. The company has operating lease costs of $7.6 million and $22.9 million for the three and nine months ended September 28, 2019, respectively, including short-term lease expense and variable lease costs, which were immaterial in the quarter.



Leases (in thousands)	September 28, 2019
Operating lease right-of-use assets	$	98,690

Operating Lease Liability:
Current	23,070
Non-current	75,986
Total Liability	$	99,056



Total Lease Commitments (in thousands)
	Operating Leases
Remainder of 2019	$	6,792
2020	24,956
2021	21,755
2022	16,990
2023	11,678
2024 and thereafter	32,632
Total future lease commitments	114,803
Less imputed interest	15,747
Total	$	99,056



Other Lease Information (in thousands, except lease term and discount rate)	Three Months Ended September 28, 2019		Nine Months Ended September 28, 2019
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,605	$	18,905

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	10,001		23,993

			September 28, 2019

Weighted-average remaining lease terms leases - Operating			6.2 years

Weighted-average discount rate - Operating			3.4		%