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Leases | 9 Months Ended
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Sep. 28, 2019
Disclosure Of Leases [Abstract] |
Leases |
4. | LEASES: We lease certain equipment, office space and land. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.
Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at our sole discretion and we consider these options in determining the lease term used to establish our right-of-use assets and lease liabilities. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or a purchase option reasonably certain of exercise. We determine that a contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In evaluating whether we have the right to control the use of an identified asset, we assess whether or not we have the right to direct the use of the identified asset and to obtain substantially all of the economic benefit from the use of the identified asset. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Certain of our lease agreements include payments that adjust periodically for consumption of goods provided by the right-of-use asset in excess of contractually determined minimum amounts and for inflation. These variable lease payments are not significant. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Supplemental statement of earnings information related to our leases is as follows (in thousands):
|  |  |  | Three Months |  |  | Nine Months |
|  |  |  | (13 Weeks) Ended |  |  | (39 Weeks) Ended |
|  | Statement of Earnings Classification |  | Sept. 28, 2019 |  |  | Sept. 28, 2019 |
Operating lease cost |  | Cost of products sold |  | $ | 4,932 |  |  | $ | 16,075 |
Operating lease cost |  | Marketing, administrative and other expenses |  |  | 990 |  |  |  | 1,572 |
Total operating lease cost |  |  |  | $ | 5,922 |  |  | $ | 17,647 |
Finance lease cost: |  |  |  |  |  |  |  |  |  |
Amortization of leased assets |  | Cost of products sold |  | $ | 2,377 |  |  | $ | 7,054 |
Interest on lease liabilities |  | Interest expense, net |  |  | 2,788 |  |  |  | 8,451 |
Total finance lease cost |  |  |  | $ | 5,165 |  |  | $ | 15,505 |
Total lease cost |  |  |  | $ | 11,087 |  |  | $ | 33,152 |
Supplemental cash flow information related to our leases is as follows (in thousands):
|  | Nine Months |
|  | (39 Weeks) Ended |
|  | Sept. 28, 2019 |
Cash paid for amounts included in measurement of lease liabilities: |  |  |  |
Operating cash flows from operating leases |  | $ | 16,766 |
Operating cash flows from finance leases |  | $ | 8,451 |
Financing cash flows from finance leases |  | $ | 6,538 |
Supplemental balance sheet information related to our leases is as follows (in thousands):
|  | Balance Sheet Classification |  | Sept. 28, 2019 |
Assets: |  |  |  |  |  |
Operating lease |  | Other assets |  | $ | 92,022 |
Finance lease |  | Property, plant and equipment, net |  |  | 67,554 |
Total leased |  |  |  | $ | 159,576 |
Liabilities: |  |  |  |  |  |
Current operating |  | Accrued expenses and other current liabilities |  | $ | 17,362 |
Current finance |  | Current portion of long-term debt and finance lease obligations |  |  | 8,878 |
Non-current operating |  | Deferred credits and other liabilities |  |  | 75,854 |
Non-current finance |  | Long-term debt and finance lease obligations due after one year |  |  | 72,773 |
Total leased |  |  |  | $ | 174,867 |
Weighted-average remaining lease term and discount rate for our leases are as follows:
|  | Sept. 28, 2019
Weighted-average remaining lease term - operating leases |  | 9.3 years
Weighted-average remaining lease term - finance leases |  | 10.3 years
Weighted-average discount rate - operating leases |  | 3.8%
Weighted-average discount rate - finance leases |  | 30.8%
The reason for the substantial weighted-average discount rate – finance leases, of 30.8%, is due to Nucor’s past accounting for the respective finance leases following the former accounting guidance for capital leases. Pursuant to the former lease accounting guidance, the recognition of a capital lease asset and associated capital lease liability could not exceed the fair market value of the leased asset at the lease commencement. Accordingly, the incremental borrowing rate was adjusted upward so that the present value of the minimum lease payments would equal the fair value of the asset. Maturities of lease liabilities by fiscal year for our leases were as follows as of September 28, 2019 (in thousands):
|  | Operating Leases |  |  | Finance Leases |
Maturities of lease liabilities, year ending December 31, |  |  |  |  |  |  |  |
2019 |  | $ | 5,957 |  |  | $ | 4,904 |
2020 |  |  | 19,223 |  |  |  | 19,307 |
2021 |  |  | 16,853 |  |  |  | 18,833 |
2022 |  |  | 15,248 |  |  |  | 18,038 |
2023 |  |  | 12,161 |  |  |  | 16,194 |
Thereafter |  |  | 44,265 |  |  |  | 79,529 |
Total lease payments |  | $ | 113,707 |  |  | $ | 156,805 |
Less imputed interest |  |  | (20,491 | ) |  |  | (75,154 | )
Present value of lease liabilities |  | $ | 93,216 |  |  | $ | 81,651 |
Prior Period Disclosures - As a result of adopting the new lease accounting guidance on January 1, 2019 under the modified retrospective approach, the Company is required to present future minimum lease commitments for capital leases and operating leases having initial or noncancellable lease terms in excess of one year that were previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018 and accounted for under previous lease guidance. Total future minimum lease payments related to capital leases at December 31, 2018 were $154.8 million, with the timing of those payments estimated at that date to be made as follows: $17.7 million in 2019; a total of $33.6 million to be paid between 2020 and 2021; a total of $30.0 million to be paid between 2022 and 2023; and $73.4 million to be paid thereafter. Total future minimum lease payments related to operating leases having initial or noncancellable lease terms in excess of one year at December 31, 2018 were $128.6 million, with the timing of those payments estimated at that date to be made as follows: $31.8 million in 2019; a total of $45.0 million to be paid between 2020 and 2021; a total of $28.4 million to be paid between 2022 and 2023; and $23.5 million to be paid thereafter. The gross amount of assets recorded under capital leases was $89.4 million as of December 31, 2018, which primarily consisted of buildings and improvements or machinery and equipment.

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- Definition Disclosure of Leases + References No definition available. + Details
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- Definition The entire disclosure for finance leases and operating leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References No definition available. + Details
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