Operating leases

9 Months Ended

Mar. 28, 2020

Leases [Abstract]

Leases

5. Leases

Substantially all the Company’s leases are classified as operating leases and are predominately related to real property for distribution centers, office space and integration facilities with a lease term of up to 18 years. The Company’s equipment leases are primarily for automobiles and equipment, and are not material to the consolidated financial statements.

The Company determines if an arrangement contains a lease at inception based on whether it conveys the right to control the use of an identified asset in exchange for consideration. Lease right-of-use assets (“operating lease assets”) and associated liabilities (“operating lease liabilities”) are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Certain lease agreements may include one or more options to extend or terminate a lease. Lease terms are inclusive of these options if it is reasonably certain that the Company will exercise such options.

The Company’s leases generally do not provide a readily determinable implicit borrowing rate, as such, the discount rate used to calculate present value is based upon an estimate of the Company’s secured borrowing rate. The estimated secured borrowing rates used at the date of adoption for each lease varies in accordance with the lease term and the currency of the lease payments. Lease cost is recognized on a straight-line basis over the lease term and is included as a component of “Selling, general, and administrative expenses” in the consolidated statements of operations. Lease payments are primarily fixed; however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the measurement of operating lease assets and liabilities.

The components of lease cost related to the Company’s operating leases were as follows (in thousands):

	Third Quarter		Nine Months
	Ended		Ended
	March 28, 2020
Operating lease cost	$	19,257	$	57,633
Variable lease cost		5,496		15,594
Total lease cost	$	24,753	$	73,227

Future minimum operating lease payments as of March 28, 2020 are as follows (in thousands):

Fiscal Year
Remainder of fiscal 2020	$	19,735
2021		58,995
2022		49,061
2023		42,079
2024		32,965
Thereafter		167,259
Total future operating lease payments		370,094
Total imputed interest on operating lease liabilities		(67,059)
Total operating lease liabilities	$	303,035

Prior to the Company’s adoption of ASC 842, future minimum operating lease payments as of June 29, 2019 were as follows (in thousands) on an undiscounted basis and excluding non-lease components:

Fiscal Year
2020	$	68,710
2021		52,225
2022		42,069
2023		32,245
2024		23,305
Thereafter		85,196
Total lease payments	$	303,750

Other information pertaining to operating leases consists of the following:

Operating Lease Term and Discount Rate
Weighted-average remaining lease term in years	9.6
Weighted-average discount rate	3.8	%

Supplemental cash flow information related to the Company’s operating leases for the nine months ended March 28, 2020 was as follows (in thousands):

Supplemental Cash Flow Information:
Cash paid for operating lease liabilities	$	46,418
Operating lease assets obtained from new operating lease liabilities		30,750