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Leases | 9 Months Ended
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Sep. 28, 2019
Leases [Abstract] |
Leases | 8 Leases The Company adopted new accounting guidance regarding the accounting for leases as of January 1, 2019 using a modified retrospective transition approach that was applied to leases existing as of, or entered into after, January 1, 2019. The Company elected the package of transition provisions available for expired or existing contracts, which allowed the Company to carryforward historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Upon adoption, the Company recorded a right-of-use lease asset and lease liabilities in the amount $100 million as of January 1, 2019. The adoption of this standard did not have a material impact on the Company’s results of operations, cash flows and retained earnings. Prior to the adoption of the new lease accounting standard, undiscounted future minimum rents payable as of December 31, 2018 under non-cancelable leases with initial terms exceeding one year were as follows (in thousands):
2019 |  | $ | 28,417 |
2020 |  |  | 23,424 |
2021 |  |  | 16,032 |
2022 |  |  | 11,816 |
2023 and thereafter |  |  | 23,269 |
Total future minimum lease payments |  | $ | 102,958 |
The Company’s operating leases consist of property leases for sales, demonstration, laboratory, warehouse and office spaces, automotive leases for sales and service personnel and equipment leases, primarily used in our manufacturing and distribution operations. The lease policies described below were effective as of January 1, 2019. For leases with terms greater than 12 months, the Company recorded the related right-of-use asset and lease liability obligation at the present value of lease payments over the term of the leases. Some of the Company’s leases include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments. A certain number of these leases contain rent escalation clauses, either fixed or adjusted periodically for inflation of market rates, that are factored into the Company’s determination of lease payments. The Company also has variable lease payments that do not depend on a rate or index, primarily for items such as common area maintenance and real estate taxes, which are recorded as variable costs when incurred. In addition, the Company’s lease agreements that contain lease and non-lease components are generally accounted for as a single lease component. The Company has elected not to apply the recognition requirements of the new accounting guidance to leases with terms less than 12 months. For these leases, the Company recognizes lease payments in net income on a straight-line basis over the term of the lease. As of September 28, 2019 and December 31, 2018, the Company does not have leases that are classified as finance leases. When available, the Company uses the rate implicit in the lease to discount lease payments to determine the present value of the lease liabilities; however, most of the leases do not provide a readily determinable implicit rate and, as required by the accounting guidance, the Company estimated its incremental secured borrowing rate to discount the lease payments based on information available at lease commencement (or, for the leases in existence on the adoption date, the January 1, 2019 information). The Company’s incremental borrowing rate reflects the estimated rate of interest that the Company would pay to borrow on a collateralized basis over a similar term to the lease payments in a similar economic environment. As of September 28, 2019, the Company has lease agreements that expire at various dates through 203 4 , with a weighted-average remaining lease term of 4.7 years. Rental expense was $9 million for the three months ended September 28, 2019 under the new lease accounting standard and $8 million for the three months ended September 29, 2018 under the previous lease accounting standard. Rental expense was $27 million for the nine months ended September 28, 2019 under the new lease accounting standard and $23 million for the nine months ended September 29, 2018 under the previous lease accounting standard. As of September 28, 2019, the weighted-average discount rate used to determine the present value of lease liabilities was 3.95%. Cash paid for amounts included in the measurement of lease liabilities in operating activities in the statement of cash flows was $27 million during the nine months ended September 28, 2019. The Company’s right-of-use lease assets and lease liabilities included in the consolidated balance sheets are classified as follows (in thousands):
|  | Financial Statement Classification |  | September 28, 2019 |
Assets: |  |  |  |  |  |
Property operating lease assets |  | Operating lease assets |  | $ | 57,028 |
Automobile operating lease assets |  | Operating lease assets |  |  | 26,122 |
Equipment operating lease assets |  | Operating lease assets |  |  | 1,962 |
Total lease assets |  |  |  | $ | 85,112 |
Liabilities: |  |  |  |  |  |
Current operating lease liabilities |  | Current operating lease liabilities |  | $ | 23,936 |
Long-term operating lease liabilities |  | Long-term operating lease liabilities |  |  | 61,372 |
Total lease liabilities |  |  |  | $ | 85,308 |
Undiscounted future minimum rents payable as of September 28, 2019 under non-cancelable leases with initial terms exceeding one year reconcile to lease liabilities included in the consolidated balance sheet as follows (in thousands):
2019 (remaining 3 months) |  | $ | 6,600 |
2020 |  |  | 22,727 |
2021 |  |  | 15,418 |
2022 |  |  | 8,538 |
2023 |  |  | 5,931 |
2024 and thereafter |  |  | 38,482 |
Total future minimum lease payments |  |  | 97,696 |
Less: amount of lease payments representing interest |  |  | (12,388 | )
Present value of future minimum lease payments |  |  | 85,308 |
Less: current operating lease liabilities |  |  | (23,936 | )
Long-term operating lease liabilities |  | $ | 61,372 |

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
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