XML 26 R13.htm IDEA: XBRL DOCUMENT
v3.20.2

Leases | 9 Months Ended
--- | ---
Jul. 04, 2020
Leases [Abstract] |
Leases | Leases The Company’s lease portfolio includes both real estate and non-real estate type leases which are accounted for as either finance or operating leases. Real estate leases generally include office, warehouse and manufacturing facilities and non-real estate leases generally include office equipment and vehicles. The Company determines if a contract is or contains a lease at inception. The Company’s leases have remaining lease terms of less than 1 year to 40 years. Renewal options that are deemed reasonably certain are included as part of the lease term for purposes of calculating the right-of-use (“ROU”) assets and lease liability. Variable lease payments are generally expensed as incurred and include certain index-based changes in rent, certain nonlease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. The Company elected the practical expedient to not separate lease and nonlease components, as such nonlease components are included in the calculation of the ROU asset and lease liability and included in the lease expense over the term of the lease. The Company uses a discount rate to calculate the ROU asset and lease liability. When the implicit rate is known or provided in the lease documents, the Company is required to use this rate. In cases in which the implicit rate is not known, the Company uses an estimated incremental borrowing rate. Operating lease ROU assets and lease liabilities are recorded on the date the Company takes possession of the leased assets with expense recognized on a straight-line basis over the lease term. Leases with an estimated total term of 12 months or less are not recorded on the balance sheet and the lease expense is recognized on a straight-line basis over the lease term. Generally, the Company's lease agreements do not contain material residual value guarantees or material restrictive covenants. Upon adoption of ASU 2016-02, the Company recorded $45.5 million of right-of-use assets and lease liabilities, related to its existing operating lease portfolio. The Company also reclassified amounts previously held on the balance sheet to operating right-of-use assets and operating lease liabilities upon adoption due to existing arrangements subject to the new standard, including $30.2 million of prepaid leases in other non-current assets. The accounting for the Company’s finance leases remained substantially unchanged. In addition, the company recognized a $1.1 million reduction to retained earnings as a result of two existing build-to-suit arrangements for the facilities in Guadalajara, Mexico that were reassessed to be finance leases under the new standard. The adoption of this new standard did not have a material impact on the Condensed Consolidated Statements of Cash Flows or Condensed Consolidated Statements of Comprehensive Income. As a result of the adoption, the following adjustments were made to the opening balances of the Company's Condensed Consolidated Balance Sheets (in thousands):
| September 28, 2019 |  | Impacts due to adoption of Topic 842 |  | September 29, 2019
ASSETS |  |  |  |  |
Prepaid expenses and other | $ | 31,974 |  |  | $ | (170) |  |  | $ | 31,804 |
Operating right-of-use assets | — |  |  | 75,790 |  |  | 75,790 |
Property, plant and equipment, net | 384,224 |  |  | (1,833) |  |  | 382,391 |
Deferred income taxes | 13,654 |  |  | 432 |  |  | 14,086 |
Other non-current assets | 64,714 |  |  | (30,193) |  |  | 34,521 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |
Other accrued liabilities | $ | 106,461 |  |  | $ | 7,939 |  |  | $ | 114,400 |
Long-term debt and finance lease obligations, net of current portion | 187,278 |  |  | (207) |  |  | 187,071 |
Long-term operating lease liabilities | — |  |  | 37,371 |  |  | 37,371 |
Retained earnings | 1,178,677 |  |  | (1,077) |  |  | 1,177,600 |
The components of lease expense for three and nine months ended July 4, 2020 were as follows (in thousands):
|  | Three Months Ended |  | Nine Months Ended
|  | July 4, 2020 |  | July 4, 2020
Finance lease expense: |  |  |  |
Amortization of right-of-use assets |  | $ | 951 |  |  | $ | 3,220 |
Interest on lease liabilities |  | 1,236 |  |  | 3,738 |
Operating lease expense |  | 2,898 |  |  | 8,977 |
Other lease expense |  | 957 |  |  | 2,216 |
Total |  | $ | 6,042 |  |  | $ | 18,151 |
Based on the nature of the ROU asset, amortization of finance right-of-use assets, operating lease expense and other lease expense are recorded within either cost of goods sold or selling and administrative expenses and interest on finance lease liabilities is recorded within interest expense on the Condensed Consolidated Statements of Comprehensive Income. Other lease expense includes lease expense for leases with an estimated total term of twelve months or less and variable lease expense related to variations in lease payments as a result of a change in factors or circumstances occurring after the lease possession date. The following tables sets forth the amount of lease assets and lease liabilities included in the Company’s Condensed Consolidated Balance Sheets (in thousands):
| Financial Statement Line Item | July 4, 2020
ASSETS |  |
Finance lease assets | Property, plant and equipment, net | $ | 37,484 |
Operating lease assets | Right-of-use operating lease assets | 71,885 |
Total lease assets |  | $ | 109,369 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |
Current |  |
Finance lease liabilities | Current portion of long-term debt and finance lease obligations | $ | 2,765 |
Operating lease liabilities | Other accrued liabilities | 8,061 |
Non-current |  |
Finance lease liabilities | Long-term debt and finance lease obligations, net of current portion | 37,387 |
Operating lease liabilities | Long-term operating lease liabilities | 38,077 |
Total lease liabilities |  | $ | 86,290 |
Other information related to the Company’s leases was as follows:
|  | July 4, 2020
Weighted-average remaining lease term (in years) |  |
Finance leases |  | 12.8
Operating leases |  | 18.5
Weighted-average discount rate |  |
Finance leases |  | 17.6 | %
Operating leases |  | 3.0 | %
|  | Three Months Ended |  | Nine Months Ended
|  | July 4, 2020 |  | July 4, 2020
Cash paid for amounts included in the measurement of lease liabilities (in thousands) |  |  |  |
Operating cash flows used in finance leases |  | $ | 1,152 |  |  | $ | 3,401 |
Operating cash flows used in operating leases |  | 2,445 |  |  | 8,283 |
Finance cash flows used in finance leases |  | 989 |  |  | 2,553 |
ROU assets obtained in exchange for lease liabilities (in thousands) |  |  |  |
Operating leases |  | $ | 83 |  |  | $ | 7,592 |
Finance leases |  | 2,133 |  |  | 2,490 |
Future minimum lease payments required under finance and operating leases as of July 4, 2020, were as follows (in thousands):
|  | Operating leases |  | Finance leases
Remaining 2020 |  | $ | 2,581 |  |  | $ | 1,782 |
2021 |  | 8,787 |  |  | 7,285 |
2022 |  | 8,013 |  |  | 6,811 |
2023 |  | 7,570 |  |  | 5,785 |
2024 |  | 5,963 |  |  | 4,993 |
2025 and thereafter |  | 20,457 |  |  | 98,762 |
Total minimum lease payments |  | 53,371 |  |  | 125,418 |
Less: imputed interest |  | (7,233) |  |  | (85,266) |
Present value of lease liabilities |  | $ | 46,138 |  |  | $ | 40,152 |
As of July 4, 2020, the Company’s future operating leases that have not yet commenced are immaterial. Future minimum lease payments required under long-term operating and capital leases as of September 28, 2019, were as follows (in thousands):
|  | Operating leases |  | Capital leases
2020 |  | $ | 10,395 |  |  | $ | 6,734 |
2021 |  | 6,554 |  |  | 3,490 |
2022 |  | 5,584 |  |  | 2,884 |
2023 |  | 5,153 |  |  | 1,652 |
2024 |  | 3,713 |  |  | 958 |
Thereafter |  | 9,426 |  |  | 34,143 |
Total |  | $ | 40,825 |  |  | $ | 49,861 |

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
Name: | us-gaap_LeasesOfLesseeDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration