XML 29 R19.htm IDEA: XBRL DOCUMENT v3.19.1
Leases
 3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases Leases
The Company routinely enters into leasing arrangements for real estate (including manufacturing facilities, office space, warehouses, and packaging centers), transportation equipment (automobiles, forklifts, and trailers), and office equipment (copiers and postage machines). The assessment of the certainty associated with the exercise of various lease renewal, termination, and purchase options included in the Company's lease contracts is at the Company's sole discretion. Most real estate leases, in particular, include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years. The Company's leases do not have any significant residual value guarantees or restrictive covenants.
As the implicit rate in the Company's leases is not readily determinable, the Company calculates its right of use lease liabilities using discount rates based upon the Company’s incremental secured borrowing rate, which contemplates and reflects a particular geographical region’s interest rate for the leases active within that region of the Company’s global operations. The Company further utilizes a portfolio approach by assigning a “short” rate to contracts with lease terms of 10 years or less and a “long” rate for contracts greater than 10 years. See Note 2 for further information regarding the Company's adoption of ASU 2016-02, "Leases."
The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities at March 31, 2019:

ClassificationBalance Sheet LocationMarch 31, 2019
Lease Assets
Operating lease assetsRight of Use Asset - Operating Leases$308,166 
Finance lease assetsOther Assets22,122 
Total lease assets330,288 
Lease Liabilities
Current operating lease liabilitiesAccrued expenses and other54,979 
Current finance lease liabilitiesNotes payable and current portion of debt9,684 
Total current lease liabilities64,663 
Noncurrent operating lease liabilitiesNoncurrent Operating Lease Liabilities262,663 
Noncurrent finance lease liabilitiesLong-term Debt, Net of Current Portion11,472 
Total noncurrent lease liabilities274,135 
Total lease liabilities$338,798 

As of March 31, 2019, the Company has entered into additional leases that have not yet commenced. The associated contracts include payments over the respective lease terms totaling $1,789, which are not reflected in the Company's liabilities recorded as of March 31, 2019. These leases will commence during fiscal year 2019 with lease terms ranging from 3 years to 6.4 years.
Certain of the Company’s leases include variable costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, and also non-lease components that were incurred based upon actual terms rather than contractually fixed amounts. In addition, variable costs are incurred for lease payments that are indexed to a change in rate or index. Because the right of use asset recorded on the balance sheet was determined based upon factors considered at the commencement date, subsequent changes in the rate or index that were not contemplated in the right of use asset balances recorded on the balance sheet result in variable expenses being incurred when paid during the lease term.
The following table sets forth the components of the Company's total lease cost for the three months ended March 31, 2019:
Lease CostThree Months Ended March 31, 2019
Operating lease cost(a)$15,545 
Finance lease cost:
Amortization of lease asset(a) (b)2,069 
Interest on lease liabilities(c)276 
Variable lease cost(a) (d)9,178 
Total lease cost$27,068 

(a) Production-related and administrative amounts are included in cost of sales and selling, general and administrative expenses,  respectively.
(b) Included in depreciation and amortization.

(c) Included in interest expense.

(d) Also includes short term lease costs, which are deemed immaterial.

In compliance with ASC 842, the Company must provide the prior year disclosures required under the previous lease guidance (ASC 840) for comparative periods presented herein. Rental expense under operating leases for the three months ended April 1, 2018 was $18,901. 

The following table sets forth the five-year maturity schedule of the Company's lease liabilities as of March 31, 2019:
Maturity of Lease LiabilitiesOperating LeasesFinance LeasesTotal
2019 (excluding three months ended March 31, 2019)$45,175 $7,522 $52,697 
202053,114 8,649 61,763 
202145,288 3,132 48,420 
202239,572 1,609 41,181 
202336,248 969 37,217 
Beyond 2023188,226 836 189,062 
Total lease payments$407,623 $22,717 $430,340 
Less: Interest89,981 1,561 91,542 
Lease Liabilities$317,642 $21,156 $338,798 
As presented in our 2018 Form 10-K (under ASC 840), the future minimum rentals under noncancellable operating leases with terms of more than one year, payable over the remaining lives of the leases at December 31, 2018, were as follows:
PeriodMinimum Future Rental Commitments
2019$48,200 
202041,700 
202132,500 
202227,300 
202321,400 
Beyond 202392,300 

The following tables set forth the Company's weighted average remaining lease term and discount rates used in the calculation of its outstanding lease liabilities March 31, 2019, along with other lease-related information for the three months ended March 31, 2019:
Lease Term and Discount RateAs of March 31, 2019
Weighted-average remaining lease term (years):
Operating leases11.4
Finance leases3.0
Weighted-average discount rate:
Operating leases 4.96%  
Finance leases5.10%  
Other InformationThree Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases $15,246 
Operating cash flows used by finance leases$276 
Financing cash flows used by finance leases$2,281 
Leased assets obtained in exchange for new operating lease liabilities$661 
Leased assets obtained in exchange for new finance lease liabilities$— 
Leases Leases
The Company routinely enters into leasing arrangements for real estate (including manufacturing facilities, office space, warehouses, and packaging centers), transportation equipment (automobiles, forklifts, and trailers), and office equipment (copiers and postage machines). The assessment of the certainty associated with the exercise of various lease renewal, termination, and purchase options included in the Company's lease contracts is at the Company's sole discretion. Most real estate leases, in particular, include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years. The Company's leases do not have any significant residual value guarantees or restrictive covenants.
As the implicit rate in the Company's leases is not readily determinable, the Company calculates its right of use lease liabilities using discount rates based upon the Company’s incremental secured borrowing rate, which contemplates and reflects a particular geographical region’s interest rate for the leases active within that region of the Company’s global operations. The Company further utilizes a portfolio approach by assigning a “short” rate to contracts with lease terms of 10 years or less and a “long” rate for contracts greater than 10 years. See Note 2 for further information regarding the Company's adoption of ASU 2016-02, "Leases."
The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities at March 31, 2019:

ClassificationBalance Sheet LocationMarch 31, 2019
Lease Assets
Operating lease assetsRight of Use Asset - Operating Leases$308,166 
Finance lease assetsOther Assets22,122 
Total lease assets330,288 
Lease Liabilities
Current operating lease liabilitiesAccrued expenses and other54,979 
Current finance lease liabilitiesNotes payable and current portion of debt9,684 
Total current lease liabilities64,663 
Noncurrent operating lease liabilitiesNoncurrent Operating Lease Liabilities262,663 
Noncurrent finance lease liabilitiesLong-term Debt, Net of Current Portion11,472 
Total noncurrent lease liabilities274,135 
Total lease liabilities$338,798 

As of March 31, 2019, the Company has entered into additional leases that have not yet commenced. The associated contracts include payments over the respective lease terms totaling $1,789, which are not reflected in the Company's liabilities recorded as of March 31, 2019. These leases will commence during fiscal year 2019 with lease terms ranging from 3 years to 6.4 years.
Certain of the Company’s leases include variable costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, and also non-lease components that were incurred based upon actual terms rather than contractually fixed amounts. In addition, variable costs are incurred for lease payments that are indexed to a change in rate or index. Because the right of use asset recorded on the balance sheet was determined based upon factors considered at the commencement date, subsequent changes in the rate or index that were not contemplated in the right of use asset balances recorded on the balance sheet result in variable expenses being incurred when paid during the lease term.
The following table sets forth the components of the Company's total lease cost for the three months ended March 31, 2019:
Lease CostThree Months Ended March 31, 2019
Operating lease cost(a)$15,545 
Finance lease cost:
Amortization of lease asset(a) (b)2,069 
Interest on lease liabilities(c)276 
Variable lease cost(a) (d)9,178 
Total lease cost$27,068 

(a) Production-related and administrative amounts are included in cost of sales and selling, general and administrative expenses,  respectively.
(b) Included in depreciation and amortization.

(c) Included in interest expense.

(d) Also includes short term lease costs, which are deemed immaterial.

In compliance with ASC 842, the Company must provide the prior year disclosures required under the previous lease guidance (ASC 840) for comparative periods presented herein. Rental expense under operating leases for the three months ended April 1, 2018 was $18,901. 

The following table sets forth the five-year maturity schedule of the Company's lease liabilities as of March 31, 2019:
Maturity of Lease LiabilitiesOperating LeasesFinance LeasesTotal
2019 (excluding three months ended March 31, 2019)$45,175 $7,522 $52,697 
202053,114 8,649 61,763 
202145,288 3,132 48,420 
202239,572 1,609 41,181 
202336,248 969 37,217 
Beyond 2023188,226 836 189,062 
Total lease payments$407,623 $22,717 $430,340 
Less: Interest89,981 1,561 91,542 
Lease Liabilities$317,642 $21,156 $338,798 
As presented in our 2018 Form 10-K (under ASC 840), the future minimum rentals under noncancellable operating leases with terms of more than one year, payable over the remaining lives of the leases at December 31, 2018, were as follows:
PeriodMinimum Future Rental Commitments
2019$48,200 
202041,700 
202132,500 
202227,300 
202321,400 
Beyond 202392,300 

The following tables set forth the Company's weighted average remaining lease term and discount rates used in the calculation of its outstanding lease liabilities March 31, 2019, along with other lease-related information for the three months ended March 31, 2019:
Lease Term and Discount RateAs of March 31, 2019
Weighted-average remaining lease term (years):
Operating leases11.4
Finance leases3.0
Weighted-average discount rate:
Operating leases 4.96%  
Finance leases5.10%  
Other InformationThree Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases $15,246 
Operating cash flows used by finance leases$276 
Financing cash flows used by finance leases$2,281 
Leased assets obtained in exchange for new operating lease liabilities$661 
Leased assets obtained in exchange for new finance lease liabilities$—