LEASES

6 Months Ended

Jun. 29, 2019

Effective January 1, 2019, the Company adopted ASU 2016-02, Leases, applying the standard to leases existing at the effective date. For arrangements entered into following the transition date, applicability of the standard is determined at inception.

The Company leases certain manufacturing, warehouse and distribution locations, vehicles and equipment, including fleet vehicles. Many of these leases have options to terminate prior to or extend beyond the end of the term. The exercise of the majority of lease renewal options is at the Company’s sole discretion. Some lease agreements have variable payments, the majority of these are real estate agreements in which future increases in rent are based on an index. Lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the reasonably expected holding period at commencement date. Few of the Company’s lease contracts provide a readily determinable implicit rate. For these contracts, an estimated incremental borrowing rate (“IBR”) is utilized, based on information available at the inception of the lease. The Company’s IBR is determined based on securing borrowings, further described in Note 13 - Long-term Debt and Note Payable.

Weighted average information about the Company’s lease portfolio as of June 29, 2019 was as follows:



Weighted-average remaining lease term	6.4 years
Weighted-average IBR	6.1	%

Operating lease costs for the three and six months ended June 29, 2019 were as follows (in thousands):



	Three Months Ended		Six Months Ended
	June 29, 2019		June 29, 2019
Operating lease costs
Fixed lease costs	$	32,172	$	53,222
Variable lease costs (a)	8,660		19,214

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

Cash and non-cash activities for the three and six months ended June 29, 2019 were as follows (in thousands):



	Three Months Ended		Six Months Ended
	June 29, 2019		June 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	21,810	$	43,473

Right-of-use assets obtained in exchange for new operating lease liabilities	$	20,977	$	325,033

Future minimum lease payments under non-cancelable leases as of June 29, 2019 were as follows (in thousands):



	Operating Leases
2019 (excluding the six months ended June 29, 2019)	$	43,697
2020	78,097
2021	65,650
2022	51,336
2023	26,129
Thereafter	91,234
Total future minimum lease payments	356,143
Less: interest	68,338
Present value of future minimum lease payments	$	287,805

As of June 29, 2019
Current portion of lease liabilities	$	69,837
Long-term portion of lease liabilities	217,968
Total	$	287,805