Lessee ROU Assets and Lease Liabilities Lessee ROU Assets and Lease Liabilities

12 Months Ended

Dec. 28, 2019

9. Lessee ROU Assets and Lease Liabilities

The Company adopted ASC 842, the lease accounting standard, effective as of December 30, 2018. Among other things, the Company’s adoption of ASC 842 resulted in: (a) the recognition of lessee ROU assets for the right to use assets subject to operating leases; and (b) the recognition of lessee lease liabilities for its obligation to make operating lease payments. See “Recently Adopted Accounting Pronouncements” in Note 2 to these consolidated financial statements for additional information related to the Company’s adoption of ASC 842.

The Company leases certain facilities in North and South America, Europe, the Middle East and Asia-Pacific regions under operating lease agreements expiring at various dates through June 2028. In addition, the Company leases equipment in the U.S. and Europe that are classified as operating leases and expire at various dates through September 2023. The majority of these leases are non-cancellable and generally do not contain any material restrictive covenants, material residual value guarantees or other material guarantees. The Company recognizes lease costs under these agreements using a straight-line method based on total lease payments. Certain facility leases contain predetermined price escalations and in some cases renewal options, the longest of which is for five years.

The Company generally estimates the applicable discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. As of December 28, 2019, the weighted average discount rate used by the Company for all operating leases was approximately 3.7%.

For the period ended December 28, 2019, the balance sheet classifications for amounts related to the Company’s operating leases for which it is the lessee were as follows:



	Balance sheet classification	Amount
Lessee ROU assets	Other non-current assets	$	19,137

Lessee current lease liabilities	Other current liabilities	4,653
Lessee non-current lease liabilities	Other non-current liabilities	15,834
Total operating lease liabilities		$	20,487

The weighted average remaining lease term for the Company’s operating leases was 8.0 years as of December 28, 2019.

As of December 28, 2019, estimated future operating lease payments for each of the following fiscal years were as follows (in thousands):



Fiscal year	Amount
2020	$	5,280
2021	3,371
2022	2,165
2023	1,875
2024	1,756
Thereafter⁽¹⁾	9,399
Total	23,846
Imputed interest	(3,359		)
Present value	$	20,487

______________

⁽¹⁾ Includes optional renewal period for certain leases.

As of December 29, 2018, the estimated future minimum lease payments, including interest, under operating leases for each of the following fiscal years ending on or about December 31 were as follows (in thousands):



Fiscal year	Amount
2019	$	6,926
2020	4,422
2021	2,384
2022	1,701
2023	1,568
Thereafter⁽¹⁾	9,921
Total	$	26,922

______________

⁽¹⁾ Includes optional renewal period for certain leases.

Lease costs for the year ended December 28, 2019 were as follows (in thousands):



	Amount
Operating lease costs	$	6,790
Short-term lease costs	12
Sublease income	(232		)
Total lease cost	$	6,570

For the years ended December 29, 2018 and December 30, 2017, rental expense related to operating leases was $6.9 million and $6.7 million, respectively.