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Leases | 12 Months Ended
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Sep. 26, 2020
Leases [Abstract] |
Leases | Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), referred to as ASC 842. The purpose of ASU 2016-02 is to increase the transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet, including those previously classified as operating leases under GAAP, and disclosing key information about leasing arrangements. ASC 842, as amended, is effective for public entities for annual periods beginning after December 15, 2018, including interim periods within those annual periods and was effective for the Company in fiscal 2020. The Company adopted the standard using the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new lease standard on September 29, 2019, rather than at the earliest comparative period presented in the financial statements. Prior periods are presented in accordance with the lease guidance under ASC Topic 840, Leases (ASC 840). Upon transition, the Company applied the package of practical expedients permitted under ASC 842 transition guidance to its entire lease portfolio at September 29, 2019. As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases, and (iii) initial direct costs for any existing leases. Furthermore, as a lessee the Company elected to combine lease and non-lease components together for the majority of its leases. As a result, for these applicable classes of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with that lease component as a single lease component. Under ASC 842 as a lessor, in instances where the Company places instruments (or equipment) at customer sites as part of its reagent rental contracts, certain of the Company's reagent rental contracts could be classified as sales-type leases. Under sales-type leases, there is accelerated expense recognition for the cost of the placed equipment and potentially up-front revenue in the event there are fixed rental payments, a portion of which would be allocated to the equipment. The Company does not have a significant amount of sales-type leases. Under ASC 840, all instruments placed under the Company's reagent rental programs were classified as operating leases and instrument revenue and cost were recognized over the term of the contract. Upon adoption of the new lease standard, the Company recognized operating lease right-of-use assets and finance lease right-of-use assets of $91.7 million and $10.2 million, respectively, and corresponding operating lease liabilities and finance lease liabilities of $96.6 million and $21.0 million, respectively. This includes recording the Company’s existing capital lease as a finance lease at transition. In addition, the Company derecognized $32.6 million of property, plant and equipment and $35.2 million of finance lease obligations recorded in accrued expenses and other long-term liabilities associated with two previously existing build-to-suit lease arrangements. Right-of-use assets and corresponding liabilities for these build-to-suit lease arrangements are included within the total amount recognized upon adoption of the new lease standard. Lessee Activity - Leases where Hologic is the Lessee The majority of the Company's facilities are occupied under operating lease arrangements with various expiration dates through 2035, some of which include options to extend the term of the lease, and some of which include options to terminate the lease within one year. The Company has operating leases for office space, land, warehouse and manufacturing space, vehicles and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. For leases executed in fiscal 2020 and later, the Company accounts for the lease components and the non-lease components as a single lease component. The Company's leases have remaining lease terms of one year to approximately 15 years, some of which may include options to extend the leases for up to 20 years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised. The Company does not have any leases that include residual value guarantees. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. The right-of-use assets and related liabilities for operating leases are included in other assets, accrued expenses, and other long-term liabilities in the consolidated balance sheet as of September 26, 2020. The Company's lease classified as a capital lease in fiscal 2019 is now classified as a finance lease on the balance sheet as of September 26, 2020. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the incremental borrowing rate, which is the estimated rate that would be incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The weighted average discount rate utilized on the Company's operating and finance lease liabilities as of September 26, 2020 was 2.62%. The following table presents supplemental balance sheet information related to the Company's operating and finance leases:
|  |  | September 26, 2020
|  | Balance Sheet Location | Operating Leases | Finance Lease
Assets |  |  |  |
Lease right-of-use assets |  | Other assets | $ | 80.7 |  | $ | — |
Liabilities |  |  |  |
Operating lease liabilities (current) |  | Accrued expenses | $ | 23.5 |  | $ | — |
Finance lease liabilities (current) |  | Finance lease obligations - short term | $ | — |  | $ | 1.9 |
Operating lease liabilities (non-current) |  | Other long-term liabilities | $ | 65.6 |  | $ | — |
Finance lease liabilities (non-current) |  | Finance lease obligations - long term | $ | — |  | $ | 17.4 |
The finance lease was previously recorded as a capital lease in the consolidated balance at September 28, 2019, and the short-term and long-term liabilities were $1.8 million and $19.2 million, respectively. The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating and finance leases:
|  | As of September 26, 2020 |  |
|  | Operating Leases | Finance Lease |  |  |
Weighted average remaining lease term |  | 5.58 | 7.64 |  |  |
Weighted average discount rate |  | 2.0 | % | 5.1 | % |  |  |
The following table provides information related to the Company’s operating and finance leases:
|  | Year Ended September 26, 2020 |
Operating lease cost (a) | $ | 27.5 |  |
Finance lease cost - amortization of right-of-use assets | $ | 0.3 |  |
Finance lease cost - interest cost | $ | 1.0 |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |
| Operating cash flows from finance leases | $ | 1.0 |  |
| Operating cash flows from operating leases | $ | 23.9 |  |
| Financing cash flows from finance leases | $ | 1.7 |  |
| Total cash paid for amounts included in the measurement of lease liabilities | $ | 26.6 |  |
ROU assets arising from entering into new operating lease obligations | $ | 13.3 |  |
(a) Includes short-term lease expense and variable lease costs, which were immaterial for the year ended September 26, 2020. Rent expense under FASB ASC Topic 840 was $23.1 million for fiscal 2019 and 2018. The following table presents the future minimum lease payments under non-cancellable operating lease liabilities and finance lease as of September 26, 2020:
Fiscal Year |  | Operating Leases | Finance Lease
2021 |  | 25.0 |  | 2.8 |
2022 |  | 20.3 |  | 3.0 |
2023 |  | 13.8 |  | 3.0 |
2024 |  | 11.1 |  | 3.0 |
2025 |  | 8.5 |  | 3.1 |
Thereafter |  | 16.0 |  | 8.4 |
Total future minimum lease payments |  | 94.7 |  | 23.3 |
Less: imputed interest |  | (5.6) |  | (4.0) |
Present value of lease liabilities |  | $ | 89.1 |  | $ | 19.3 |
For comparative purposes, the Company's future minimum lease payments as of September 28, 2019 were as follows:
Fiscal Year |  | Operating Leases | Finance Lease
2020 |  | 20.5 |  | 5.8 |
2021 |  | 17.3 |  | 5.8 |
2022 |  | 13.3 |  | 6.1 |
2023 |  | 6.6 |  | 6.2 |
2024 |  | 5.9 |  | 5.5 |
Thereafter |  | 14.6 |  | 19.5 |
Total future minimum lease payments |  | 78.2 |  | 48.9 |
Lessor Activity - Leases where Hologic is the Lessor Certain assets, primarily diagnostics instruments, are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as performance obligations for reagents and other consumables. These contractual arrangements are subject to termination provisions which are evaluated in determining the lease term for lease accounting purposes. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g., reagent) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Lease revenue represented approximately 4% of the Company’s consolidated revenue for the twelve months ended September 26, 2020. In connection with the disposition of the Medical Aesthetics business, the Company entered into an agreement to sublease to Cynosure its U.S. headquarters and manufacturing location. As such, the Company derecognized $10.2 million for the right-of-use asset for the finance lease, included in property, plant and equipment, and recorded a lease receivable, which was $19.3 million as of September 26, 2020. The Company subleases a portion of a building it owns and some of its rented facilities and has received aggregate rental income of $2.0 million, $2.7 million and $2.6 million in fiscal 2020, 2019 and 2018, respectively, which has been recorded as an offset to operating lease costs. The future minimum annual rental income payments under these sublease agreements at September 26, 2020 are as follows:
Fiscal 2021 |  | $ | 3.0 |  |
Fiscal 2022 |  | 3.0 |  |
Fiscal 2023 |  | 3.0 |  |
Fiscal 2024 |  | 2.9 |  |
Fiscal 2025 |  | 1.9 |  |
Thereafter |  | 2.6 |  |
Total |  | $ | 16.4 |  |
Leases | Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), referred to as ASC 842. The purpose of ASU 2016-02 is to increase the transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet, including those previously classified as operating leases under GAAP, and disclosing key information about leasing arrangements. ASC 842, as amended, is effective for public entities for annual periods beginning after December 15, 2018, including interim periods within those annual periods and was effective for the Company in fiscal 2020. The Company adopted the standard using the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new lease standard on September 29, 2019, rather than at the earliest comparative period presented in the financial statements. Prior periods are presented in accordance with the lease guidance under ASC Topic 840, Leases (ASC 840). Upon transition, the Company applied the package of practical expedients permitted under ASC 842 transition guidance to its entire lease portfolio at September 29, 2019. As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases, and (iii) initial direct costs for any existing leases. Furthermore, as a lessee the Company elected to combine lease and non-lease components together for the majority of its leases. As a result, for these applicable classes of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with that lease component as a single lease component. Under ASC 842 as a lessor, in instances where the Company places instruments (or equipment) at customer sites as part of its reagent rental contracts, certain of the Company's reagent rental contracts could be classified as sales-type leases. Under sales-type leases, there is accelerated expense recognition for the cost of the placed equipment and potentially up-front revenue in the event there are fixed rental payments, a portion of which would be allocated to the equipment. The Company does not have a significant amount of sales-type leases. Under ASC 840, all instruments placed under the Company's reagent rental programs were classified as operating leases and instrument revenue and cost were recognized over the term of the contract. Upon adoption of the new lease standard, the Company recognized operating lease right-of-use assets and finance lease right-of-use assets of $91.7 million and $10.2 million, respectively, and corresponding operating lease liabilities and finance lease liabilities of $96.6 million and $21.0 million, respectively. This includes recording the Company’s existing capital lease as a finance lease at transition. In addition, the Company derecognized $32.6 million of property, plant and equipment and $35.2 million of finance lease obligations recorded in accrued expenses and other long-term liabilities associated with two previously existing build-to-suit lease arrangements. Right-of-use assets and corresponding liabilities for these build-to-suit lease arrangements are included within the total amount recognized upon adoption of the new lease standard. Lessee Activity - Leases where Hologic is the Lessee The majority of the Company's facilities are occupied under operating lease arrangements with various expiration dates through 2035, some of which include options to extend the term of the lease, and some of which include options to terminate the lease within one year. The Company has operating leases for office space, land, warehouse and manufacturing space, vehicles and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. For leases executed in fiscal 2020 and later, the Company accounts for the lease components and the non-lease components as a single lease component. The Company's leases have remaining lease terms of one year to approximately 15 years, some of which may include options to extend the leases for up to 20 years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised. The Company does not have any leases that include residual value guarantees. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. The right-of-use assets and related liabilities for operating leases are included in other assets, accrued expenses, and other long-term liabilities in the consolidated balance sheet as of September 26, 2020. The Company's lease classified as a capital lease in fiscal 2019 is now classified as a finance lease on the balance sheet as of September 26, 2020. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the incremental borrowing rate, which is the estimated rate that would be incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The weighted average discount rate utilized on the Company's operating and finance lease liabilities as of September 26, 2020 was 2.62%. The following table presents supplemental balance sheet information related to the Company's operating and finance leases:
|  |  | September 26, 2020
|  | Balance Sheet Location | Operating Leases | Finance Lease
Assets |  |  |  |
Lease right-of-use assets |  | Other assets | $ | 80.7 |  | $ | — |
Liabilities |  |  |  |
Operating lease liabilities (current) |  | Accrued expenses | $ | 23.5 |  | $ | — |
Finance lease liabilities (current) |  | Finance lease obligations - short term | $ | — |  | $ | 1.9 |
Operating lease liabilities (non-current) |  | Other long-term liabilities | $ | 65.6 |  | $ | — |
Finance lease liabilities (non-current) |  | Finance lease obligations - long term | $ | — |  | $ | 17.4 |
The finance lease was previously recorded as a capital lease in the consolidated balance at September 28, 2019, and the short-term and long-term liabilities were $1.8 million and $19.2 million, respectively. The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating and finance leases:
|  | As of September 26, 2020 |  |
|  | Operating Leases | Finance Lease |  |  |
Weighted average remaining lease term |  | 5.58 | 7.64 |  |  |
Weighted average discount rate |  | 2.0 | % | 5.1 | % |  |  |
The following table provides information related to the Company’s operating and finance leases:
|  | Year Ended September 26, 2020 |
Operating lease cost (a) | $ | 27.5 |  |
Finance lease cost - amortization of right-of-use assets | $ | 0.3 |  |
Finance lease cost - interest cost | $ | 1.0 |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |
| Operating cash flows from finance leases | $ | 1.0 |  |
| Operating cash flows from operating leases | $ | 23.9 |  |
| Financing cash flows from finance leases | $ | 1.7 |  |
| Total cash paid for amounts included in the measurement of lease liabilities | $ | 26.6 |  |
ROU assets arising from entering into new operating lease obligations | $ | 13.3 |  |
(a) Includes short-term lease expense and variable lease costs, which were immaterial for the year ended September 26, 2020. Rent expense under FASB ASC Topic 840 was $23.1 million for fiscal 2019 and 2018. The following table presents the future minimum lease payments under non-cancellable operating lease liabilities and finance lease as of September 26, 2020:
Fiscal Year |  | Operating Leases | Finance Lease
2021 |  | 25.0 |  | 2.8 |
2022 |  | 20.3 |  | 3.0 |
2023 |  | 13.8 |  | 3.0 |
2024 |  | 11.1 |  | 3.0 |
2025 |  | 8.5 |  | 3.1 |
Thereafter |  | 16.0 |  | 8.4 |
Total future minimum lease payments |  | 94.7 |  | 23.3 |
Less: imputed interest |  | (5.6) |  | (4.0) |
Present value of lease liabilities |  | $ | 89.1 |  | $ | 19.3 |
For comparative purposes, the Company's future minimum lease payments as of September 28, 2019 were as follows:
Fiscal Year |  | Operating Leases | Finance Lease
2020 |  | 20.5 |  | 5.8 |
2021 |  | 17.3 |  | 5.8 |
2022 |  | 13.3 |  | 6.1 |
2023 |  | 6.6 |  | 6.2 |
2024 |  | 5.9 |  | 5.5 |
Thereafter |  | 14.6 |  | 19.5 |
Total future minimum lease payments |  | 78.2 |  | 48.9 |
Lessor Activity - Leases where Hologic is the Lessor Certain assets, primarily diagnostics instruments, are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as performance obligations for reagents and other consumables. These contractual arrangements are subject to termination provisions which are evaluated in determining the lease term for lease accounting purposes. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g., reagent) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Lease revenue represented approximately 4% of the Company’s consolidated revenue for the twelve months ended September 26, 2020. In connection with the disposition of the Medical Aesthetics business, the Company entered into an agreement to sublease to Cynosure its U.S. headquarters and manufacturing location. As such, the Company derecognized $10.2 million for the right-of-use asset for the finance lease, included in property, plant and equipment, and recorded a lease receivable, which was $19.3 million as of September 26, 2020. The Company subleases a portion of a building it owns and some of its rented facilities and has received aggregate rental income of $2.0 million, $2.7 million and $2.6 million in fiscal 2020, 2019 and 2018, respectively, which has been recorded as an offset to operating lease costs. The future minimum annual rental income payments under these sublease agreements at September 26, 2020 are as follows:
Fiscal 2021 |  | $ | 3.0 |  |
Fiscal 2022 |  | 3.0 |  |
Fiscal 2023 |  | 3.0 |  |
Fiscal 2024 |  | 2.9 |  |
Fiscal 2025 |  | 1.9 |  |
Thereafter |  | 2.6 |  |
Total |  | $ | 16.4 |  |
Leases | Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), referred to as ASC 842. The purpose of ASU 2016-02 is to increase the transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet, including those previously classified as operating leases under GAAP, and disclosing key information about leasing arrangements. ASC 842, as amended, is effective for public entities for annual periods beginning after December 15, 2018, including interim periods within those annual periods and was effective for the Company in fiscal 2020. The Company adopted the standard using the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new lease standard on September 29, 2019, rather than at the earliest comparative period presented in the financial statements. Prior periods are presented in accordance with the lease guidance under ASC Topic 840, Leases (ASC 840). Upon transition, the Company applied the package of practical expedients permitted under ASC 842 transition guidance to its entire lease portfolio at September 29, 2019. As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases, and (iii) initial direct costs for any existing leases. Furthermore, as a lessee the Company elected to combine lease and non-lease components together for the majority of its leases. As a result, for these applicable classes of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with that lease component as a single lease component. Under ASC 842 as a lessor, in instances where the Company places instruments (or equipment) at customer sites as part of its reagent rental contracts, certain of the Company's reagent rental contracts could be classified as sales-type leases. Under sales-type leases, there is accelerated expense recognition for the cost of the placed equipment and potentially up-front revenue in the event there are fixed rental payments, a portion of which would be allocated to the equipment. The Company does not have a significant amount of sales-type leases. Under ASC 840, all instruments placed under the Company's reagent rental programs were classified as operating leases and instrument revenue and cost were recognized over the term of the contract. Upon adoption of the new lease standard, the Company recognized operating lease right-of-use assets and finance lease right-of-use assets of $91.7 million and $10.2 million, respectively, and corresponding operating lease liabilities and finance lease liabilities of $96.6 million and $21.0 million, respectively. This includes recording the Company’s existing capital lease as a finance lease at transition. In addition, the Company derecognized $32.6 million of property, plant and equipment and $35.2 million of finance lease obligations recorded in accrued expenses and other long-term liabilities associated with two previously existing build-to-suit lease arrangements. Right-of-use assets and corresponding liabilities for these build-to-suit lease arrangements are included within the total amount recognized upon adoption of the new lease standard. Lessee Activity - Leases where Hologic is the Lessee The majority of the Company's facilities are occupied under operating lease arrangements with various expiration dates through 2035, some of which include options to extend the term of the lease, and some of which include options to terminate the lease within one year. The Company has operating leases for office space, land, warehouse and manufacturing space, vehicles and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. For leases executed in fiscal 2020 and later, the Company accounts for the lease components and the non-lease components as a single lease component. The Company's leases have remaining lease terms of one year to approximately 15 years, some of which may include options to extend the leases for up to 20 years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised. The Company does not have any leases that include residual value guarantees. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. The right-of-use assets and related liabilities for operating leases are included in other assets, accrued expenses, and other long-term liabilities in the consolidated balance sheet as of September 26, 2020. The Company's lease classified as a capital lease in fiscal 2019 is now classified as a finance lease on the balance sheet as of September 26, 2020. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the incremental borrowing rate, which is the estimated rate that would be incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The weighted average discount rate utilized on the Company's operating and finance lease liabilities as of September 26, 2020 was 2.62%. The following table presents supplemental balance sheet information related to the Company's operating and finance leases:
|  |  | September 26, 2020
|  | Balance Sheet Location | Operating Leases | Finance Lease
Assets |  |  |  |
Lease right-of-use assets |  | Other assets | $ | 80.7 |  | $ | — |
Liabilities |  |  |  |
Operating lease liabilities (current) |  | Accrued expenses | $ | 23.5 |  | $ | — |
Finance lease liabilities (current) |  | Finance lease obligations - short term | $ | — |  | $ | 1.9 |
Operating lease liabilities (non-current) |  | Other long-term liabilities | $ | 65.6 |  | $ | — |
Finance lease liabilities (non-current) |  | Finance lease obligations - long term | $ | — |  | $ | 17.4 |
The finance lease was previously recorded as a capital lease in the consolidated balance at September 28, 2019, and the short-term and long-term liabilities were $1.8 million and $19.2 million, respectively. The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating and finance leases:
|  | As of September 26, 2020 |  |
|  | Operating Leases | Finance Lease |  |  |
Weighted average remaining lease term |  | 5.58 | 7.64 |  |  |
Weighted average discount rate |  | 2.0 | % | 5.1 | % |  |  |
The following table provides information related to the Company’s operating and finance leases:
|  | Year Ended September 26, 2020 |
Operating lease cost (a) | $ | 27.5 |  |
Finance lease cost - amortization of right-of-use assets | $ | 0.3 |  |
Finance lease cost - interest cost | $ | 1.0 |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |
| Operating cash flows from finance leases | $ | 1.0 |  |
| Operating cash flows from operating leases | $ | 23.9 |  |
| Financing cash flows from finance leases | $ | 1.7 |  |
| Total cash paid for amounts included in the measurement of lease liabilities | $ | 26.6 |  |
ROU assets arising from entering into new operating lease obligations | $ | 13.3 |  |
(a) Includes short-term lease expense and variable lease costs, which were immaterial for the year ended September 26, 2020. Rent expense under FASB ASC Topic 840 was $23.1 million for fiscal 2019 and 2018. The following table presents the future minimum lease payments under non-cancellable operating lease liabilities and finance lease as of September 26, 2020:
Fiscal Year |  | Operating Leases | Finance Lease
2021 |  | 25.0 |  | 2.8 |
2022 |  | 20.3 |  | 3.0 |
2023 |  | 13.8 |  | 3.0 |
2024 |  | 11.1 |  | 3.0 |
2025 |  | 8.5 |  | 3.1 |
Thereafter |  | 16.0 |  | 8.4 |
Total future minimum lease payments |  | 94.7 |  | 23.3 |
Less: imputed interest |  | (5.6) |  | (4.0) |
Present value of lease liabilities |  | $ | 89.1 |  | $ | 19.3 |
For comparative purposes, the Company's future minimum lease payments as of September 28, 2019 were as follows:
Fiscal Year |  | Operating Leases | Finance Lease
2020 |  | 20.5 |  | 5.8 |
2021 |  | 17.3 |  | 5.8 |
2022 |  | 13.3 |  | 6.1 |
2023 |  | 6.6 |  | 6.2 |
2024 |  | 5.9 |  | 5.5 |
Thereafter |  | 14.6 |  | 19.5 |
Total future minimum lease payments |  | 78.2 |  | 48.9 |
Lessor Activity - Leases where Hologic is the Lessor Certain assets, primarily diagnostics instruments, are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as performance obligations for reagents and other consumables. These contractual arrangements are subject to termination provisions which are evaluated in determining the lease term for lease accounting purposes. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g., reagent) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Lease revenue represented approximately 4% of the Company’s consolidated revenue for the twelve months ended September 26, 2020. In connection with the disposition of the Medical Aesthetics business, the Company entered into an agreement to sublease to Cynosure its U.S. headquarters and manufacturing location. As such, the Company derecognized $10.2 million for the right-of-use asset for the finance lease, included in property, plant and equipment, and recorded a lease receivable, which was $19.3 million as of September 26, 2020. The Company subleases a portion of a building it owns and some of its rented facilities and has received aggregate rental income of $2.0 million, $2.7 million and $2.6 million in fiscal 2020, 2019 and 2018, respectively, which has been recorded as an offset to operating lease costs. The future minimum annual rental income payments under these sublease agreements at September 26, 2020 are as follows:
Fiscal 2021 |  | $ | 3.0 |  |
Fiscal 2022 |  | 3.0 |  |
Fiscal 2023 |  | 3.0 |  |
Fiscal 2024 |  | 2.9 |  |
Fiscal 2025 |  | 1.9 |  |
Thereafter |  | 2.6 |  |
Total |  | $ | 16.4 |  |
Leases | Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), referred to as ASC 842. The purpose of ASU 2016-02 is to increase the transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet, including those previously classified as operating leases under GAAP, and disclosing key information about leasing arrangements. ASC 842, as amended, is effective for public entities for annual periods beginning after December 15, 2018, including interim periods within those annual periods and was effective for the Company in fiscal 2020. The Company adopted the standard using the transition method provided by ASC Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Under this method, the Company applied the new lease standard on September 29, 2019, rather than at the earliest comparative period presented in the financial statements. Prior periods are presented in accordance with the lease guidance under ASC Topic 840, Leases (ASC 840). Upon transition, the Company applied the package of practical expedients permitted under ASC 842 transition guidance to its entire lease portfolio at September 29, 2019. As a result, the Company was not required to reassess (i) whether any expired or existing contracts are or contain leases, (ii) the classification of any expired or existing leases, and (iii) initial direct costs for any existing leases. Furthermore, as a lessee the Company elected to combine lease and non-lease components together for the majority of its leases. As a result, for these applicable classes of underlying assets, the Company accounted for each separate lease component and the non-lease components associated with that lease component as a single lease component. Under ASC 842 as a lessor, in instances where the Company places instruments (or equipment) at customer sites as part of its reagent rental contracts, certain of the Company's reagent rental contracts could be classified as sales-type leases. Under sales-type leases, there is accelerated expense recognition for the cost of the placed equipment and potentially up-front revenue in the event there are fixed rental payments, a portion of which would be allocated to the equipment. The Company does not have a significant amount of sales-type leases. Under ASC 840, all instruments placed under the Company's reagent rental programs were classified as operating leases and instrument revenue and cost were recognized over the term of the contract. Upon adoption of the new lease standard, the Company recognized operating lease right-of-use assets and finance lease right-of-use assets of $91.7 million and $10.2 million, respectively, and corresponding operating lease liabilities and finance lease liabilities of $96.6 million and $21.0 million, respectively. This includes recording the Company’s existing capital lease as a finance lease at transition. In addition, the Company derecognized $32.6 million of property, plant and equipment and $35.2 million of finance lease obligations recorded in accrued expenses and other long-term liabilities associated with two previously existing build-to-suit lease arrangements. Right-of-use assets and corresponding liabilities for these build-to-suit lease arrangements are included within the total amount recognized upon adoption of the new lease standard. Lessee Activity - Leases where Hologic is the Lessee The majority of the Company's facilities are occupied under operating lease arrangements with various expiration dates through 2035, some of which include options to extend the term of the lease, and some of which include options to terminate the lease within one year. The Company has operating leases for office space, land, warehouse and manufacturing space, vehicles and certain equipment. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. For leases executed in fiscal 2020 and later, the Company accounts for the lease components and the non-lease components as a single lease component. The Company's leases have remaining lease terms of one year to approximately 15 years, some of which may include options to extend the leases for up to 20 years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised. The Company does not have any leases that include residual value guarantees. The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. The right-of-use assets and related liabilities for operating leases are included in other assets, accrued expenses, and other long-term liabilities in the consolidated balance sheet as of September 26, 2020. The Company's lease classified as a capital lease in fiscal 2019 is now classified as a finance lease on the balance sheet as of September 26, 2020. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the incremental borrowing rate, which is the estimated rate that would be incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The weighted average discount rate utilized on the Company's operating and finance lease liabilities as of September 26, 2020 was 2.62%. The following table presents supplemental balance sheet information related to the Company's operating and finance leases:
|  |  | September 26, 2020
|  | Balance Sheet Location | Operating Leases | Finance Lease
Assets |  |  |  |
Lease right-of-use assets |  | Other assets | $ | 80.7 |  | $ | — |
Liabilities |  |  |  |
Operating lease liabilities (current) |  | Accrued expenses | $ | 23.5 |  | $ | — |
Finance lease liabilities (current) |  | Finance lease obligations - short term | $ | — |  | $ | 1.9 |
Operating lease liabilities (non-current) |  | Other long-term liabilities | $ | 65.6 |  | $ | — |
Finance lease liabilities (non-current) |  | Finance lease obligations - long term | $ | — |  | $ | 17.4 |
The finance lease was previously recorded as a capital lease in the consolidated balance at September 28, 2019, and the short-term and long-term liabilities were $1.8 million and $19.2 million, respectively. The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating and finance leases:
|  | As of September 26, 2020 |  |
|  | Operating Leases | Finance Lease |  |  |
Weighted average remaining lease term |  | 5.58 | 7.64 |  |  |
Weighted average discount rate |  | 2.0 | % | 5.1 | % |  |  |
The following table provides information related to the Company’s operating and finance leases:
|  | Year Ended September 26, 2020 |
Operating lease cost (a) | $ | 27.5 |  |
Finance lease cost - amortization of right-of-use assets | $ | 0.3 |  |
Finance lease cost - interest cost | $ | 1.0 |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |
| Operating cash flows from finance leases | $ | 1.0 |  |
| Operating cash flows from operating leases | $ | 23.9 |  |
| Financing cash flows from finance leases | $ | 1.7 |  |
| Total cash paid for amounts included in the measurement of lease liabilities | $ | 26.6 |  |
ROU assets arising from entering into new operating lease obligations | $ | 13.3 |  |
(a) Includes short-term lease expense and variable lease costs, which were immaterial for the year ended September 26, 2020. Rent expense under FASB ASC Topic 840 was $23.1 million for fiscal 2019 and 2018. The following table presents the future minimum lease payments under non-cancellable operating lease liabilities and finance lease as of September 26, 2020:
Fiscal Year |  | Operating Leases | Finance Lease
2021 |  | 25.0 |  | 2.8 |
2022 |  | 20.3 |  | 3.0 |
2023 |  | 13.8 |  | 3.0 |
2024 |  | 11.1 |  | 3.0 |
2025 |  | 8.5 |  | 3.1 |
Thereafter |  | 16.0 |  | 8.4 |
Total future minimum lease payments |  | 94.7 |  | 23.3 |
Less: imputed interest |  | (5.6) |  | (4.0) |
Present value of lease liabilities |  | $ | 89.1 |  | $ | 19.3 |
For comparative purposes, the Company's future minimum lease payments as of September 28, 2019 were as follows:
Fiscal Year |  | Operating Leases | Finance Lease
2020 |  | 20.5 |  | 5.8 |
2021 |  | 17.3 |  | 5.8 |
2022 |  | 13.3 |  | 6.1 |
2023 |  | 6.6 |  | 6.2 |
2024 |  | 5.9 |  | 5.5 |
Thereafter |  | 14.6 |  | 19.5 |
Total future minimum lease payments |  | 78.2 |  | 48.9 |
Lessor Activity - Leases where Hologic is the Lessor Certain assets, primarily diagnostics instruments, are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as performance obligations for reagents and other consumables. These contractual arrangements are subject to termination provisions which are evaluated in determining the lease term for lease accounting purposes. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g., reagent) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Lease revenue represented approximately 4% of the Company’s consolidated revenue for the twelve months ended September 26, 2020. In connection with the disposition of the Medical Aesthetics business, the Company entered into an agreement to sublease to Cynosure its U.S. headquarters and manufacturing location. As such, the Company derecognized $10.2 million for the right-of-use asset for the finance lease, included in property, plant and equipment, and recorded a lease receivable, which was $19.3 million as of September 26, 2020. The Company subleases a portion of a building it owns and some of its rented facilities and has received aggregate rental income of $2.0 million, $2.7 million and $2.6 million in fiscal 2020, 2019 and 2018, respectively, which has been recorded as an offset to operating lease costs. The future minimum annual rental income payments under these sublease agreements at September 26, 2020 are as follows:
Fiscal 2021 |  | $ | 3.0 |  |
Fiscal 2022 |  | 3.0 |  |
Fiscal 2023 |  | 3.0 |  |
Fiscal 2024 |  | 2.9 |  |
Fiscal 2025 |  | 1.9 |  |
Thereafter |  | 2.6 |  |
Total |  | $ | 16.4 |  |

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