LEASES

9 Months Ended

Sep. 28, 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 incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.

Weighted average information about the Company’s lease portfolio as of September 28, 2019 was as follows:


Weighted-average remaining lease term	5.6 years
Weighted-average IBR	6.08	%

Operating lease costs for the three and nine months ended September 28, 2019 were as follows (in thousands):


	Three Months Ended		Nine Months Ended
	September 28, 2019		September 28, 2019
Operating lease costs
Fixed lease costs	$	23,903	$	77,125
Variable lease costs⁽¹⁾	8,654		27,868




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

Cash and non-cash activities for the three and nine months ended September 28, 2019 were as follows (in thousands):


	Three Months Ended		Nine Months Ended
	September 28, 2019		September 28, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	23,463	$	66,936



Right-of-use assets obtained in exchange for new operating lease liabilities	$	47,236	$	372,269

Future minimum lease payments under non-cancelable leases as of September 28, 2019 were as follows (in thousands):


	Operating Leases
2019 (excluding the nine months ended September 28, 2019)	$	23,640
2020	86,617
2021	76,607
2022	61,548
2023	34,935
Thereafter	119,393
Total future minimum lease payments	402,740
Less: interest	90,123
Present value of future minimum lease payments	$	312,617

As of September 28, 2019
Current portion of lease liabilities	$	68,993
Long-term portion of lease liabilities	243,624
Total	$	312,617