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LEASES | 9 Months Ended
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Sep. 28, 2019
Leases [Abstract] |
LEASES | LEASES As indicated in Note 2, effective January 1, 2019, we adopted ASC 842 under the modified retrospective transition approach. As a result, for periods prior to 2019, leases continue to be presented based on prior guidance. Summarized below is our policy under, as well as the various other disclosures required by, ASC 842. We elected to account for lease agreements with lease and non-lease components as a single component for all leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis over the lease term. We review if an arrangement is a lease at inception and conclude whether the contract contains an identified asset if we have the right to obtain substantially all the economic benefit and direct the use of the asset. Operating leases with ROU assets are reflected within “Other assets,” “Accrued expenses,” and “Other long-term liabilities” within our condensed consolidated balance sheet. Finance leases are included in “Property, plant and equipment,” “Current maturities of long-term debt,” and “Long-term debt.” ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and the related liabilities are recognized at commencement date based on the present value of lease payments over the lease term. These payments include renewal options when reasonably certain to be exercised, and exclude termination options. As none of our leases provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any prepaid lease payments and excludes lease incentives. We have operating and finance leases for facilities, equipment, and vehicles. Our leases have remaining lease terms of one year to 10 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the lease within one year. We rent or sublease certain space within owned facilities to third parties under operating leases, with the impact of these lease arrangements being immaterial to our condensed consolidated financial statements.
| The components of lease expense were as follows:
|  | Three months ended |  | Nine months ended
|  | September 28, 2019 |  | September 28, 2019
| Operating lease cost (1) | $ | 3.4 |  |  | $ | 10.0 |
| Variable lease cost | $ | — |  |  | $ | 0.1 |
| Finance lease cost: |  |  |
| Amortization of right-of-use assets | $ | 0.3 |  |  | $ | 0.9 |
| Interest on lease liabilities | — |  |  | 0.1 |
| Total finance lease cost | $ | 0.3 |  |  | $ | 1.0 |
_________________________ (1) Includes short-term lease cost of $1.1 and $3.0 for the three and nine months ended September 28, 2019, respectively.
| Supplemental cash flow information related to leases for the nine months ended September 28, 2019 was as follows:
| Cash paid for amounts included in the measurement of lease liabilities: |  |
| Operating cash flow from operating leases | $ | 7.0 |
| Operating cash flows from finance leases | 0.1 |
| Financing cash flows from finance leases | 0.9 |
| Non-cash activities: |
| Operating lease right-of-use assets obtained in exchange for new lease obligations | 3.2 |
| Finance lease right-of-use assets obtained in exchange for new lease obligations | 0.8 |
Supplemental balance sheet information related to leases as of September 28, 2019 was as follows:
Operating Leases: |  |  |  |  | Affected Line Item in the Condensed Consolidated Balance Sheet
Operating lease ROU assets |  | $ | 24.5 |  |  | Other assets
Operating lease current liabilities |  | $ | 8.0 |  |  | Accrued expenses
Operating lease non-current liabilities |  | 18.2 |  |  | Other long-term liabilities
Total operating lease liabilities |  | $ | 26.2 |  |  |
Finance Leases: |  |  |  |
Finance Lease Assets |  | $ | 2.4 |  |  | Property, plant and equipment, net
Finance lease current liabilities |  | $ | 1.0 |  |  | Current maturities of long-term debt
Finance lease non-current liabilities |  | 1.6 |  |  | Long-term debt
Total finance lease liabilities |  | $ | 2.6 |  |  |
| The weighted average remaining lease terms (years) of our leases as of September 28, 2019 were as follows:
| Operating Leases | 5.1
| Finance Leases | 3.2
The discount rate utilized to determine the present value of lease payments over the lease term is our incremental borrowing rate based on the information available at commencement date. In developing the incremental borrowing rate, we considered the interest rate that reflects a term similar to the underlying lease term on a fully collateralized basis. We concluded to apply the incremental borrowing rate at a consolidated portfolio level using a five-year term, as the results did not materially differ upon further stratification. The weighted-average discount for both our operating and finance leases was 3.8% at September 28, 2019.
The future minimum payments under our operating and finance leases were as follows as of September 28, 2019:
| Operating Leases |  | Finance Leases |  | Total
Next 12 months | $ | 8.8 |  |  | $ | 1.0 |  |  | $ | 9.8 |
12 to 24 months | 5.7 |  |  | 0.8 |  |  | 6.5 |
24 to 36 months | 4.6 |  |  | 0.5 |  |  | 5.1 |
36 to 48 months | 4.2 |  |  | 0.3 |  |  | 4.5 |
48 to 60 months | 3.9 |  |  | 0.1 |  |  | 4.0 |
Thereafter | 1.8 |  |  | — |  |  | 1.8 |
Total lease payments | 29.0 |  |  | 2.7 |  |  | 31.7 |
Less imputed interest | 2.8 |  |  | 0.1 |  |  | 2.9 |
Total | $ | 26.2 |  |  | $ | 2.6 |  |  | $ | 28.8 |
As a result of adopting ASC 842 on January 1, 2019, we are required to present the future minimum lease payments under operating leases with remaining non-cancelable terms in excess of one year that were previously disclosed in our 2018 Annual Report on Form 10-K and accounted for under the previous lease guidance. Our operating lease commitments as of December 31, 2018 were as follows:
2019 | $ | 9.1 |
2020 | 7.3 |
2021 | 4.5 |
2022 | 3.8 |
2023 | 3.4 |
Thereafter | 3.1 |
Total minimum payments | $ | 31.2 |
LEASES | LEASES As indicated in Note 2, effective January 1, 2019, we adopted ASC 842 under the modified retrospective transition approach. As a result, for periods prior to 2019, leases continue to be presented based on prior guidance. Summarized below is our policy under, as well as the various other disclosures required by, ASC 842. We elected to account for lease agreements with lease and non-lease components as a single component for all leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet and we recognize lease expense for these leases on a straight-line basis over the lease term. We review if an arrangement is a lease at inception and conclude whether the contract contains an identified asset if we have the right to obtain substantially all the economic benefit and direct the use of the asset. Operating leases with ROU assets are reflected within “Other assets,” “Accrued expenses,” and “Other long-term liabilities” within our condensed consolidated balance sheet. Finance leases are included in “Property, plant and equipment,” “Current maturities of long-term debt,” and “Long-term debt.” ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and the related liabilities are recognized at commencement date based on the present value of lease payments over the lease term. These payments include renewal options when reasonably certain to be exercised, and exclude termination options. As none of our leases provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any prepaid lease payments and excludes lease incentives. We have operating and finance leases for facilities, equipment, and vehicles. Our leases have remaining lease terms of one year to 10 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the lease within one year. We rent or sublease certain space within owned facilities to third parties under operating leases, with the impact of these lease arrangements being immaterial to our condensed consolidated financial statements.
| The components of lease expense were as follows:
|  | Three months ended |  | Nine months ended
|  | September 28, 2019 |  | September 28, 2019
| Operating lease cost (1) | $ | 3.4 |  |  | $ | 10.0 |
| Variable lease cost | $ | — |  |  | $ | 0.1 |
| Finance lease cost: |  |  |
| Amortization of right-of-use assets | $ | 0.3 |  |  | $ | 0.9 |
| Interest on lease liabilities | — |  |  | 0.1 |
| Total finance lease cost | $ | 0.3 |  |  | $ | 1.0 |
_________________________ (1) Includes short-term lease cost of $1.1 and $3.0 for the three and nine months ended September 28, 2019, respectively.
| Supplemental cash flow information related to leases for the nine months ended September 28, 2019 was as follows:
| Cash paid for amounts included in the measurement of lease liabilities: |  |
| Operating cash flow from operating leases | $ | 7.0 |
| Operating cash flows from finance leases | 0.1 |
| Financing cash flows from finance leases | 0.9 |
| Non-cash activities: |
| Operating lease right-of-use assets obtained in exchange for new lease obligations | 3.2 |
| Finance lease right-of-use assets obtained in exchange for new lease obligations | 0.8 |
Supplemental balance sheet information related to leases as of September 28, 2019 was as follows:
Operating Leases: |  |  |  |  | Affected Line Item in the Condensed Consolidated Balance Sheet
Operating lease ROU assets |  | $ | 24.5 |  |  | Other assets
Operating lease current liabilities |  | $ | 8.0 |  |  | Accrued expenses
Operating lease non-current liabilities |  | 18.2 |  |  | Other long-term liabilities
Total operating lease liabilities |  | $ | 26.2 |  |  |
Finance Leases: |  |  |  |
Finance Lease Assets |  | $ | 2.4 |  |  | Property, plant and equipment, net
Finance lease current liabilities |  | $ | 1.0 |  |  | Current maturities of long-term debt
Finance lease non-current liabilities |  | 1.6 |  |  | Long-term debt
Total finance lease liabilities |  | $ | 2.6 |  |  |
| The weighted average remaining lease terms (years) of our leases as of September 28, 2019 were as follows:
| Operating Leases | 5.1
| Finance Leases | 3.2
The discount rate utilized to determine the present value of lease payments over the lease term is our incremental borrowing rate based on the information available at commencement date. In developing the incremental borrowing rate, we considered the interest rate that reflects a term similar to the underlying lease term on a fully collateralized basis. We concluded to apply the incremental borrowing rate at a consolidated portfolio level using a five-year term, as the results did not materially differ upon further stratification. The weighted-average discount for both our operating and finance leases was 3.8% at September 28, 2019.
The future minimum payments under our operating and finance leases were as follows as of September 28, 2019:
| Operating Leases |  | Finance Leases |  | Total
Next 12 months | $ | 8.8 |  |  | $ | 1.0 |  |  | $ | 9.8 |
12 to 24 months | 5.7 |  |  | 0.8 |  |  | 6.5 |
24 to 36 months | 4.6 |  |  | 0.5 |  |  | 5.1 |
36 to 48 months | 4.2 |  |  | 0.3 |  |  | 4.5 |
48 to 60 months | 3.9 |  |  | 0.1 |  |  | 4.0 |
Thereafter | 1.8 |  |  | — |  |  | 1.8 |
Total lease payments | 29.0 |  |  | 2.7 |  |  | 31.7 |
Less imputed interest | 2.8 |  |  | 0.1 |  |  | 2.9 |
Total | $ | 26.2 |  |  | $ | 2.6 |  |  | $ | 28.8 |
As a result of adopting ASC 842 on January 1, 2019, we are required to present the future minimum lease payments under operating leases with remaining non-cancelable terms in excess of one year that were previously disclosed in our 2018 Annual Report on Form 10-K and accounted for under the previous lease guidance. Our operating lease commitments as of December 31, 2018 were as follows:
2019 | $ | 9.1 |
2020 | 7.3 |
2021 | 4.5 |
2022 | 3.8 |
2023 | 3.4 |
Thereafter | 3.1 |
Total minimum payments | $ | 31.2 |

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