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Leases | 9 Months Ended
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Sep. 28, 2019
Leases [Abstract] |
Leases | Leases Under ASC 842, Leases, the Company determines if an arrangement is a lease obligation at inception of the contract. The Company enters into operating and finance lease commitments primarily for its manufacturing and office space, vehicles, and equipment leases that expire on various dates over the next 15 years, some of which include one or more options to extend the lease for up to 5 years. In addition, the Company leases land associated with certain of its buildings in Canada and China, under long-term leases expiring on various dates ranging from 2032 to 2062, one of which includes an assumed option to extend the lease for up to 10 years. The Company's operating lease ROU assets and corresponding lease liabilities with contract terms greater than 12 months are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. In determining the present value of future lease payments, the Company utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease. In addition, the calculation may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company recognizes its operating lease expense for lease payments on a straight-line basis over the lease term. Variable lease costs are not included in fixed lease payments and, as a result, are excluded from the measurement of the ROU assets and lease liabilities. The Company expenses all variable lease costs as incurred, which were not material for the nine months ended September 28, 2019. The Company's lease agreements often contain lease and non-lease components. For real estate and equipment leases, the Company accounts for the lease and non-lease components as a single lease component. For vehicle leases, the Company does not combine lease and non-lease components. The components of lease expense are as follows:
|  | Three Months Ended |  | Nine Months Ended
(In thousands) |  | September 28, 2019 |  | September 28, 2019
Operating Lease Cost |  | $ | 1,390 |  |  | $ | 4,141 |
Short-Term Lease Cost |  | 178 |  |  | 542 |
Finance Lease Cost: |  |  |  |
ROU asset amortization |  | 309 |  |  | 907 |
Interest on lease liabilities |  | 25 |  |  | 69 |
Total Finance Lease Cost |  | 334 |  |  | 976 |
Total Lease Costs |  | $ | 1,902 |  |  | $ | 5,659 |
Supplemental cash flow information related to leases is as follows:
|  | Nine Months Ended
(In thousands) |  | September 28, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities: |  |
Operating cash flows from operating leases |  | $ | 4,223 |
Operating cash flows from finance leases |  | $ | 69 |
Financing cash flows from finance leases |  | $ | 854 |
ROU Assets Obtained in Exchange for Lease Obligations (a): |  |
Operating leases |  | $ | 27,949 |
Finance leases |  | $ | 3,575 |
(a) | Includes additions related to the transition adjustment for the adoption of ASC 842. The post-adoption additions of operating leases were $12,632,000, of which $10,994,000 related to ROU assets obtained as part of the acquisition of SMH. The post-adoption additions of finance leases were $2,224,000, of which $528,000 related to ROU assets obtained as part of the acquisition of SMH.
Supplemental balance sheet information related to leases is as follows:
(In thousands, except lease term and discount rate) |  | Balance Sheet Line Item |  | September 28, 2019
Operating Leases: |  |  |  |
ROU assets |  | Other assets |  | $ | 27,714 |
Short-term liabilities |  | Other current liabilities |  | $ | 4,217 |
Long-term liabilities |  | Other long-term liabilities |  | 25,047 |
Total operating lease liabilities |  |  |  | $ | 29,264 |
Finance Leases: |  |  |  |
ROU assets, at cost |  | Property, plant, and equipment, at cost |  | $ | 3,731 |
ROU assets accumulated amortization |  | Less: accumulated depreciation and amortization |  | (1,274 | )
ROU assets, net |  | Property, plant, and equipment, net |  | $ | 2,457 |
Short-term obligations |  | Current maturities of long-term obligations |  | $ | 1,128 |
Long-term obligations |  | Long-term obligations |  | 1,280 |
Total finance lease liabilities |  |  |  | $ | 2,408 |
Weighted Average Remaining Lease Term: |  |  |  |
Operating leases |  |  |  | 10.3 |
Finance leases |  |  |  | 2.4 |
Weighted Average Discount Rate: |  |  |  |
Operating leases |  |  |  | 3.97 | %
Finance leases |  |  |  | 4.16 | %
As of September 28, 2019, future lease payments for lease liabilities are as follows:
|  | Operating |  | Finance
(In thousands) |  | Leases |  | Leases
2019 |  | $ | 1,387 |  |  | $ | 320 |
2020 |  | 5,112 |  |  | 1,149 |
2021 |  | 4,306 |  |  | 743 |
2022 |  | 3,531 |  |  | 251 |
2023 |  | 3,078 |  |  | 62 |
Thereafter |  | 18,637 |  |  | 1 |
Total Future Lease Payments |  | 36,051 |  |  | 2,526 |
Less: Imputed Interest |  | (6,787 | ) |  | (118 | )
Present Value of Lease Payments |  | $ | 29,264 |  |  | $ | 2,408 |
As of September 28, 2019, the Company had no significant operating and finance leases that had not yet commenced. As previously disclosed in the Company's 2018 Annual Report on Form 10-K for the fiscal year ended December 29, 2018 and under the previous lease accounting standard, future minimum lease payments for noncancelable operating leases were as follows:
(In thousands) |  | December 29, 2018
2019 |  | $ | 4,507 |
2020 |  | 3,275 |
2021 |  | 2,230 |
2022 |  | 1,579 |
2023 |  | 987 |
Thereafter |  | 1,713 |
Total Future Minimum Lease Payments |  | $ | 14,291 |
Leases | Leases Under ASC 842, Leases, the Company determines if an arrangement is a lease obligation at inception of the contract. The Company enters into operating and finance lease commitments primarily for its manufacturing and office space, vehicles, and equipment leases that expire on various dates over the next 15 years, some of which include one or more options to extend the lease for up to 5 years. In addition, the Company leases land associated with certain of its buildings in Canada and China, under long-term leases expiring on various dates ranging from 2032 to 2062, one of which includes an assumed option to extend the lease for up to 10 years. The Company's operating lease ROU assets and corresponding lease liabilities with contract terms greater than 12 months are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. In determining the present value of future lease payments, the Company utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease. In addition, the calculation may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company recognizes its operating lease expense for lease payments on a straight-line basis over the lease term. Variable lease costs are not included in fixed lease payments and, as a result, are excluded from the measurement of the ROU assets and lease liabilities. The Company expenses all variable lease costs as incurred, which were not material for the nine months ended September 28, 2019. The Company's lease agreements often contain lease and non-lease components. For real estate and equipment leases, the Company accounts for the lease and non-lease components as a single lease component. For vehicle leases, the Company does not combine lease and non-lease components. The components of lease expense are as follows:
|  | Three Months Ended |  | Nine Months Ended
(In thousands) |  | September 28, 2019 |  | September 28, 2019
Operating Lease Cost |  | $ | 1,390 |  |  | $ | 4,141 |
Short-Term Lease Cost |  | 178 |  |  | 542 |
Finance Lease Cost: |  |  |  |
ROU asset amortization |  | 309 |  |  | 907 |
Interest on lease liabilities |  | 25 |  |  | 69 |
Total Finance Lease Cost |  | 334 |  |  | 976 |
Total Lease Costs |  | $ | 1,902 |  |  | $ | 5,659 |
Supplemental cash flow information related to leases is as follows:
|  | Nine Months Ended
(In thousands) |  | September 28, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities: |  |
Operating cash flows from operating leases |  | $ | 4,223 |
Operating cash flows from finance leases |  | $ | 69 |
Financing cash flows from finance leases |  | $ | 854 |
ROU Assets Obtained in Exchange for Lease Obligations (a): |  |
Operating leases |  | $ | 27,949 |
Finance leases |  | $ | 3,575 |
(a) | Includes additions related to the transition adjustment for the adoption of ASC 842. The post-adoption additions of operating leases were $12,632,000, of which $10,994,000 related to ROU assets obtained as part of the acquisition of SMH. The post-adoption additions of finance leases were $2,224,000, of which $528,000 related to ROU assets obtained as part of the acquisition of SMH.
Supplemental balance sheet information related to leases is as follows:
(In thousands, except lease term and discount rate) |  | Balance Sheet Line Item |  | September 28, 2019
Operating Leases: |  |  |  |
ROU assets |  | Other assets |  | $ | 27,714 |
Short-term liabilities |  | Other current liabilities |  | $ | 4,217 |
Long-term liabilities |  | Other long-term liabilities |  | 25,047 |
Total operating lease liabilities |  |  |  | $ | 29,264 |
Finance Leases: |  |  |  |
ROU assets, at cost |  | Property, plant, and equipment, at cost |  | $ | 3,731 |
ROU assets accumulated amortization |  | Less: accumulated depreciation and amortization |  | (1,274 | )
ROU assets, net |  | Property, plant, and equipment, net |  | $ | 2,457 |
Short-term obligations |  | Current maturities of long-term obligations |  | $ | 1,128 |
Long-term obligations |  | Long-term obligations |  | 1,280 |
Total finance lease liabilities |  |  |  | $ | 2,408 |
Weighted Average Remaining Lease Term: |  |  |  |
Operating leases |  |  |  | 10.3 |
Finance leases |  |  |  | 2.4 |
Weighted Average Discount Rate: |  |  |  |
Operating leases |  |  |  | 3.97 | %
Finance leases |  |  |  | 4.16 | %
As of September 28, 2019, future lease payments for lease liabilities are as follows:
|  | Operating |  | Finance
(In thousands) |  | Leases |  | Leases
2019 |  | $ | 1,387 |  |  | $ | 320 |
2020 |  | 5,112 |  |  | 1,149 |
2021 |  | 4,306 |  |  | 743 |
2022 |  | 3,531 |  |  | 251 |
2023 |  | 3,078 |  |  | 62 |
Thereafter |  | 18,637 |  |  | 1 |
Total Future Lease Payments |  | 36,051 |  |  | 2,526 |
Less: Imputed Interest |  | (6,787 | ) |  | (118 | )
Present Value of Lease Payments |  | $ | 29,264 |  |  | $ | 2,408 |
As of September 28, 2019, the Company had no significant operating and finance leases that had not yet commenced. As previously disclosed in the Company's 2018 Annual Report on Form 10-K for the fiscal year ended December 29, 2018 and under the previous lease accounting standard, future minimum lease payments for noncancelable operating leases were as follows:
(In thousands) |  | December 29, 2018
2019 |  | $ | 4,507 |
2020 |  | 3,275 |
2021 |  | 2,230 |
2022 |  | 1,579 |
2023 |  | 987 |
Thereafter |  | 1,713 |
Total Future Minimum Lease Payments |  | $ | 14,291 |

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- 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 + Details
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