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Leases

9 Months Ended

Oct. 03, 2021

Leases [Abstract]

Leases

Leases

The Company routinely enters into leasing arrangements for real estate (including manufacturing facilities, office space, and warehouses), 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 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.

The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities at October 3, 2021 and December 31, 2020:

Classification						Balance Sheet Location						October 3, 2021			December 31, 2020
Lease Assets
Operating lease assets						Right of Use Asset - Operating Leases						$	269,855		$	296,020
Finance lease assets						Other Assets						47,154			36,267
Total lease assets												$	317,009		$	332,287
Lease Liabilities
Current operating lease liabilities						Accrued expenses and other						$	44,588		$	52,138
Current finance lease liabilities						Notes payable and current portion of debt						6,236			4,663
Total current lease liabilities												$	50,824		$	56,801
Noncurrent operating lease liabilities						Noncurrent Operating Lease Liabilities						$	236,590		$	262,048
Noncurrent finance lease liabilities						Long-term Debt, Net of Current Portion						45,101			33,280
Total noncurrent lease liabilities												$	281,691		$	295,328
Total lease liabilities												$	332,515		$	352,129

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 assets recorded on the balance sheet were determined based upon factors considered at the commencement date of the leases, 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- and nine- month periods ended October 3, 2021 and September 27, 2020:

						Three Months Ended						Nine Months Ended
Lease Cost						October 3, 2021			September 27, 2020			October 3, 2021			September 27, 2020
Operating lease cost			(a)			$	11,623		$	18,192		$	36,720		$	46,903
Finance lease cost:
Amortization of lease asset			(a)			1,476			1,061			4,133			5,999
Interest on lease liabilities			(b)			367			258			997			721
Variable lease cost			(a) (c)			6,796			7,455			19,569			29,316
Total lease cost						$	20,262		$	26,966		$	61,419		$	82,939

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

(b) Included in interest expense.

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

The following table sets forth certain lease-related information for the nine months ended October 3, 2021 and September 27, 2020:

						Nine Months Ended
						October 3, 2021			September 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases						$	38,757		$	43,858
Operating cash flows used by finance leases						$	997		$	721
Financing cash flows used by finance leases						$	3,375		$	6,440
Noncash investing and financing activities:
Leased assets obtained in exchange for new operating lease liabilities						$	12,230		$	84,578
Leased assets obtained in exchange for new finance lease liabilities						$	7,071		$	19,122
Modification to leased assets for increase/(decrease) in operating lease liabilities						$	12,059		$	(3,977)
Modification to leased assets for increase in finance lease liabilities						$	9,586		$	19,194
Termination reclasses to decrease operating lease assets						$	(4,971)		$	(4,232)
Termination reclasses to decrease operating lease liabilities						$	(5,278)		$	(4,611)
Termination reclasses to decrease finance lease assets						$	(33)		$	(19,994)
Termination reclasses to decrease finance lease liabilities						$	(40)		$	(20,121)

Leases

Leases

The Company routinely enters into leasing arrangements for real estate (including manufacturing facilities, office space, and warehouses), 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 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.

The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities at October 3, 2021 and December 31, 2020:

Classification						Balance Sheet Location						October 3, 2021			December 31, 2020
Lease Assets
Operating lease assets						Right of Use Asset - Operating Leases						$	269,855		$	296,020
Finance lease assets						Other Assets						47,154			36,267
Total lease assets												$	317,009		$	332,287
Lease Liabilities
Current operating lease liabilities						Accrued expenses and other						$	44,588		$	52,138
Current finance lease liabilities						Notes payable and current portion of debt						6,236			4,663
Total current lease liabilities												$	50,824		$	56,801
Noncurrent operating lease liabilities						Noncurrent Operating Lease Liabilities						$	236,590		$	262,048
Noncurrent finance lease liabilities						Long-term Debt, Net of Current Portion						45,101			33,280
Total noncurrent lease liabilities												$	281,691		$	295,328
Total lease liabilities												$	332,515		$	352,129

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 assets recorded on the balance sheet were determined based upon factors considered at the commencement date of the leases, 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- and nine- month periods ended October 3, 2021 and September 27, 2020:

						Three Months Ended						Nine Months Ended
Lease Cost						October 3, 2021			September 27, 2020			October 3, 2021			September 27, 2020
Operating lease cost			(a)			$	11,623		$	18,192		$	36,720		$	46,903
Finance lease cost:
Amortization of lease asset			(a)			1,476			1,061			4,133			5,999
Interest on lease liabilities			(b)			367			258			997			721
Variable lease cost			(a) (c)			6,796			7,455			19,569			29,316
Total lease cost						$	20,262		$	26,966		$	61,419		$	82,939

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

(b) Included in interest expense.

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

The following table sets forth certain lease-related information for the nine months ended October 3, 2021 and September 27, 2020:

						Nine Months Ended
						October 3, 2021			September 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases						$	38,757		$	43,858
Operating cash flows used by finance leases						$	997		$	721
Financing cash flows used by finance leases						$	3,375		$	6,440
Noncash investing and financing activities:
Leased assets obtained in exchange for new operating lease liabilities						$	12,230		$	84,578
Leased assets obtained in exchange for new finance lease liabilities						$	7,071		$	19,122
Modification to leased assets for increase/(decrease) in operating lease liabilities						$	12,059		$	(3,977)
Modification to leased assets for increase in finance lease liabilities						$	9,586		$	19,194
Termination reclasses to decrease operating lease assets						$	(4,971)		$	(4,232)
Termination reclasses to decrease operating lease liabilities						$	(5,278)		$	(4,611)
Termination reclasses to decrease finance lease assets						$	(33)		$	(19,994)
Termination reclasses to decrease finance lease liabilities						$	(40)		$	(20,121)

X

- References

No definition available.

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X

- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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X

- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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