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Leases
 9 Months Ended
Oct. 02, 2022
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 performed after contemplating all the relevant facts and circumstances in accordance with guidance under ASC 842. Most real estate leases, in particular, include one or more options to renew, with renewal terms that typically extend the lease term in increments from one to five 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 normally not readily determinable, the Company generally 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 Company completed the acquisition of Metal Packaging on January 26, 2022. The acquisition included both operating and finance lease assets and liabilities. The acquired operating lease liabilities of $33,910 had a weighted average remaining lease maturity term and discount rate of 11.0 years and 2.8%, respectively, and the acquired finance
lease liabilities of $46,687 had a weighted average remaining lease maturity term and discount rate of 3.8 years and 7.5%, respectively, as of the date of the acquisition.
The following table sets forth the balance sheet location and aggregate values of the Company’s lease assets and lease liabilities at October 2, 2022 and December 31, 2021:
ClassificationBalance Sheet LocationOctober 2, 2022December 31, 2021
Lease Assets
Operating lease assetsRight of Use Asset - Operating Leases$296,838 $268,390 
Finance lease assetsOther Assets103,540 55,826 
Total lease assets$400,378 $324,216 
Lease Liabilities
Current operating lease liabilitiesAccrued expenses and other$49,606 $45,305 
Current finance lease liabilitiesNotes payable and current portion of debt16,115 6,952 
Total current lease liabilities$65,721 $52,257 
Noncurrent operating lease liabilitiesNoncurrent Operating Lease Liabilities$253,466 $234,167 
Noncurrent finance lease liabilitiesLong-term Debt, Net of Current Portion86,912 53,330 
Total noncurrent lease liabilities$340,378 $287,497 
Total lease liabilities$406,099 $339,754 

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 2, 2022 and October 3, 2021:
Three Months EndedNine Months Ended
Lease CostOctober 2, 2022October 3, 2021October 2, 2022October 3, 2021
Operating lease cost(a)$12,863 $11,623 $38,679 $36,720 
Finance lease cost:
     Amortization of lease asset(a)3,133 1,476 9,122 4,133 
     Interest on lease liabilities(b)1,270 367 3,517 997 
Variable lease cost(a) (c)7,894 6,796 22,416 19,569 
Impairment charges(d)61 — 293 — 
Total lease cost$25,221 $20,262 $74,027 $61,419 
(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.
(d) Impairment charges are included in “Restructuring/Asset impairment charges” in the Company’s
Consolidated Statements of Income. See Note 5 for more information.
The following table sets forth certain lease-related information for the nine-month periods ended October 2, 2022 and October 3, 2021:
Nine Months Ended
October 2, 2022October 3, 2021
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows used by operating leases $39,405 $38,757 
     Operating cash flows used by finance leases$3,517 $997 
     Financing cash flows used by finance leases$9,181 $3,375 
Noncash investing and financing activities:
     Leased assets obtained in exchange for new operating lease liabilities$31,048 $12,230 
     Leased assets obtained in exchange for new finance lease liabilities$8,224 $7,071 
     Modification to leased assets for increase in operating lease liabilities$2,258 $12,059 
     Modification to leased assets for (decrease)/increase in finance lease liabilities $(642)$9,586 
     Termination reclasses to decrease operating lease assets$(4,133)$(4,971)
     Termination reclasses to decrease operating lease liabilities$(4,382)$(5,278)
     Termination reclasses to decrease finance lease assets$(1,351)$(33)
     Termination reclasses to decrease finance lease liabilities $(87)$(40)
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 performed after contemplating all the relevant facts and circumstances in accordance with guidance under ASC 842. Most real estate leases, in particular, include one or more options to renew, with renewal terms that typically extend the lease term in increments from one to five 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 normally not readily determinable, the Company generally 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 Company completed the acquisition of Metal Packaging on January 26, 2022. The acquisition included both operating and finance lease assets and liabilities. The acquired operating lease liabilities of $33,910 had a weighted average remaining lease maturity term and discount rate of 11.0 years and 2.8%, respectively, and the acquired finance
lease liabilities of $46,687 had a weighted average remaining lease maturity term and discount rate of 3.8 years and 7.5%, respectively, as of the date of the acquisition.
The following table sets forth the balance sheet location and aggregate values of the Company’s lease assets and lease liabilities at October 2, 2022 and December 31, 2021:
ClassificationBalance Sheet LocationOctober 2, 2022December 31, 2021
Lease Assets
Operating lease assetsRight of Use Asset - Operating Leases$296,838 $268,390 
Finance lease assetsOther Assets103,540 55,826 
Total lease assets$400,378 $324,216 
Lease Liabilities
Current operating lease liabilitiesAccrued expenses and other$49,606 $45,305 
Current finance lease liabilitiesNotes payable and current portion of debt16,115 6,952 
Total current lease liabilities$65,721 $52,257 
Noncurrent operating lease liabilitiesNoncurrent Operating Lease Liabilities$253,466 $234,167 
Noncurrent finance lease liabilitiesLong-term Debt, Net of Current Portion86,912 53,330 
Total noncurrent lease liabilities$340,378 $287,497 
Total lease liabilities$406,099 $339,754 

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 2, 2022 and October 3, 2021:
Three Months EndedNine Months Ended
Lease CostOctober 2, 2022October 3, 2021October 2, 2022October 3, 2021
Operating lease cost(a)$12,863 $11,623 $38,679 $36,720 
Finance lease cost:
     Amortization of lease asset(a)3,133 1,476 9,122 4,133 
     Interest on lease liabilities(b)1,270 367 3,517 997 
Variable lease cost(a) (c)7,894 6,796 22,416 19,569 
Impairment charges(d)61 — 293 — 
Total lease cost$25,221 $20,262 $74,027 $61,419 
(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.
(d) Impairment charges are included in “Restructuring/Asset impairment charges” in the Company’s
Consolidated Statements of Income. See Note 5 for more information.
The following table sets forth certain lease-related information for the nine-month periods ended October 2, 2022 and October 3, 2021:
Nine Months Ended
October 2, 2022October 3, 2021
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows used by operating leases $39,405 $38,757 
     Operating cash flows used by finance leases$3,517 $997 
     Financing cash flows used by finance leases$9,181 $3,375 
Noncash investing and financing activities:
     Leased assets obtained in exchange for new operating lease liabilities$31,048 $12,230 
     Leased assets obtained in exchange for new finance lease liabilities$8,224 $7,071 
     Modification to leased assets for increase in operating lease liabilities$2,258 $12,059 
     Modification to leased assets for (decrease)/increase in finance lease liabilities $(642)$9,586 
     Termination reclasses to decrease operating lease assets$(4,133)$(4,971)
     Termination reclasses to decrease operating lease liabilities$(4,382)$(5,278)
     Termination reclasses to decrease finance lease assets$(1,351)$(33)
     Termination reclasses to decrease finance lease liabilities $(87)$(40)