XML 10 R13.htm IDEA: XBRL DOCUMENT
v3.19.3

Leases | 9 Months Ended
--- | ---
Sep. 28, 2019
Leases [Abstract] |
Leases | Leases The Corporation implemented ASU No. 2016-02, Leases (Topic 842), at the beginning of fiscal 2019 using the modified-retrospective transition approach. The new standard requires lessees to recognize most leases, including operating leases, on-balance sheet via a right of use ("ROU") asset and lease liability. The Corporation selected a technology tool to assist with the accounting and disclosure requirements of the new standard. All necessary changes required by the new standard, including those to the Corporation's accounting policies, business process, systems, controls, and disclosures, were identified and implemented as of the first quarter 2019. Implementation of ASU No. 2016-02 increased retained earnings by $3.0 million. This included an increase of $3.3 million driven by the recognition of the remaining deferred gain on a 2018 sale-leaseback directly into retained earnings. An offsetting decrease of $0.3 million was driven by the calculation of beginning ROU assets and lease liabilities. The Corporation recognized $73.8 million in ROU assets and $82.0 million in lease liabilities as a result of the implementation of this standard. The Corporation leases certain showrooms, office space, manufacturing facilities, distribution centers, retail stores and equipment and determines if an arrangement is a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Leases with an initial term of twelve months or less are not recorded on the Condensed Consolidated Balance Sheets; expense for these leases is recognized on a straight-line basis over the lease term. As the rates implicit in its leases cannot be readily determined, the Corporation uses a secured incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Corporation uses separate discount rates for its U.S. operations and overseas operations. Certain real estate leases include one or more options to renew with renewal terms that can extend the lease term from one to ten years. The exercise of lease renewal options is at the Corporation's sole discretion. Certain real estate leases include an option to terminate the lease term earlier than the specified lease term for a fee. These options are not included as part of the lease term unless they are reasonably certain to be exercised. Many of the Corporation's real estate lease agreements include periods of rent holidays and payments that escalate over the lease term by specified amounts. While not significant, certain equipment leases have variable lease payments based on machine hours and certain real estate leases have rate changes based on the Consumer Price Index. The Corporation's lease agreements do not contain any material residual value guarantees. The Corporation has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. On occasion, the Corporation rents or subleases certain real estate to third parties. This sublease portfolio consists mainly of operating leases for office furniture showrooms and is not significant. Leases included in the Condensed Consolidated Balance Sheet consisted of the following (in thousands):
Classification | September 28, 2019
Assets |
Right-of-use operating leases | $ | 72,087 |
Right-of-use finance leases | 2,157 |
Total Right-of-use operating / finance leases | $ | 74,244 |
Liabilities |
Current lease obligations - operating | $ | 20,506 |
Current lease obligations - finance | 501 |
Total Current lease obligations - operating / finance | 21,007 |
Long-term lease obligations - operating | 59,474 |
Long-term lease obligations - finance | 1,669 |
Total Long-term lease obligations - operating / finance | 61,143 |
Total lease obligations - operating / finance | $ | 82,150 |
Approximately 85 percent of the value of the leased assets is for real estate. The remaining 15 percent of the value of the leased assets is for equipment. Lease costs included in the Condensed Consolidated Statements of Comprehensive Income consisted of the following (in thousands):
|  | Three Months Ended |  | Nine Months Ended
| Classification | September 28, 2019 |  | September 28, 2019
Operating lease costs |  |  |  |
Fixed | Cost of sales | $ | 438 |  |  | $ | 1,366 |
| Selling and administrative expenses | 5,913 |  |  | 18,212 |
Short-term / variable | Cost of sales | 317 |  |  | 635 |
| Selling and administrative expenses | 385 |  |  | 807 |
Finance lease costs |  |  |  |
Amortization | Cost of sales, selling and administrative, and interest expense | 154 |  |  | 307 |
Less: Sublease income |  | 48 |  |  | 133 |
Total lease costs |  | $ | 7,159 |  |  | $ | 21,194 |
Maturity of lease liabilities as of September 28, 2019 is as follows (in thousands):
| Operating Leases (a) |  | Finance Leases (a) |  | Total
2019 (remaining portion of year) | $ | 6,590 |  |  | $ | 143 |  |  | $ | 6,733 |
2020 | 23,521 |  |  | 593 |  |  | 24,114 |
2021 | 16,792 |  |  | 564 |  |  | 17,356 |
2022 | 11,332 |  |  | 488 |  |  | 11,820 |
2023 | 9,388 |  |  | 436 |  |  | 9,824 |
Thereafter | 22,531 |  |  | 112 |  |  | 22,643 |
Total lease payments | 90,154 |  |  | 2,336 |  |  | 92,490 |
Less: Interest | 10,177 |  |  | 163 |  |  | 10,340 |
Present value of lease liabilities | $ | 79,977 |  |  | $ | 2,173 |  |  | $ | 82,150 |
(a) | At this time there are no operating or finance lease options to extend lease terms that are reasonably certain of being exercised, no r are there any legally binding minimum lease payments for operating or finance leases signed, but not yet commenced.
The following table summarizes the weighted-average discount rates and weighted-average remaining lease terms for operating and finance leases as of September 28, 2019:
| Weighted-Average Discount Rate (percent) |  | Weighted-Average Remaining Lease Term (years)
Operating leases | 4.2 | % |  | 5.5
Finance leases | 3.6 | % |  | 4.3
The following table summarizes cash paid for amounts included in the measurements of lease liabilities and the leased assets obtained in exchange for new operating and finance lease liabilities (in thousands):
| Nine Months Ended
| September 28, 2019
Cash paid for amounts included in the measurements of lease liabilities: |
Operating cash flows from operating / finance leases | $ | 20,072 |
Financing cash flows from finance leases | $ | 262 |
Leased assets obtained in exchange for new operating / finance lease liabilities | $ | 18,387 |
Accounting Policies and Practical Expedients Elected The Corporation elected to use the modified-retrospective method of adopting ASU 2016-02. It has been applied to all leases active on or after December 30, 2018, the start of the Corporation's fiscal year. The Corporation elected the following practical expedients as a result of adopting ASU 2016-02:
• | The Corporation has made an accounting election by class of underlying assets to not separate non-lease components of a contract from the lease components to which they relate for all classes of assets except for embedded leases.
• | The Corporation has elected not to restate prior period financial statements for the effects of the new standard. Required ASC 840 disclosures for periods prior to 2019 have been provided.
• | The Corporation has elected not to use hindsight in determining the lease term and in assessing the likelihood that a lessee purchase option will be exercised.
• | The Corporation has elected for all asset classes to not recognize ROU assets and lease liabilities for leases that at the acquisition date have a remaining lease term of twelve months or less.
Presented below are the final disclosures utilizing ASC 840 treatment which was provided in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 29, 2018: Commitments for minimum rentals under non-cancelable leases were as follows (in thousands):
| Operating Leases
2019 | $ | 24,387 |
2020 | 18,250 |
2021 | 13,324 |
2022 | 9,082 |
2023 | 6,228 |
Thereafter | 10,469 |
Total minimum lease payments | $ | 81,740 |
There were no capitalized leases as of December 29, 2018 and December 30, 2017. Rent expense under ASC 840 was as follows (in thousands):
| 2018 |  |  | 2017 |  |  | 2016 |
Rent expense | $ | 31,027 |  |  | $ | 32,158 |  |  | $ | 35,288 |
There was no contingent rent expense under operating leases for the years 2018, 2017, and 2016. As part of the Corporation's continued efforts to drive efficiency and simplification, the Corporation entered into a sale-leaseback transaction in the first quarter of 2018, selling a manufacturing facility and subsequently leasing back a portion of the facility for a term of 10 years. The net proceeds from the sale of the facility of $16.9 million were reflected in "Proceeds from sale and license of property, plant, equipment, and intangibles" in the Consolidated Statements of Cash Flows in 2018. In accordance with ASC 840, the $5.1 million gain on the sale of the facility was deferred and was being amortized as a reduction to rent expense evenly over the term of the lease. In accordance with the ASU No. 2016-02 adoption, the remaining unamortized deferred gain related to the sale-leaseback as of December 29, 2018 was recognized directly in "Retained earnings" in the Condensed Consolidated Balance Sheets in the first quarter of 2019 as a cumulative-effect adjustment as the Corporation transferred control of the asset.
Leases | Leases The Corporation implemented ASU No. 2016-02, Leases (Topic 842), at the beginning of fiscal 2019 using the modified-retrospective transition approach. The new standard requires lessees to recognize most leases, including operating leases, on-balance sheet via a right of use ("ROU") asset and lease liability. The Corporation selected a technology tool to assist with the accounting and disclosure requirements of the new standard. All necessary changes required by the new standard, including those to the Corporation's accounting policies, business process, systems, controls, and disclosures, were identified and implemented as of the first quarter 2019. Implementation of ASU No. 2016-02 increased retained earnings by $3.0 million. This included an increase of $3.3 million driven by the recognition of the remaining deferred gain on a 2018 sale-leaseback directly into retained earnings. An offsetting decrease of $0.3 million was driven by the calculation of beginning ROU assets and lease liabilities. The Corporation recognized $73.8 million in ROU assets and $82.0 million in lease liabilities as a result of the implementation of this standard. The Corporation leases certain showrooms, office space, manufacturing facilities, distribution centers, retail stores and equipment and determines if an arrangement is a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Leases with an initial term of twelve months or less are not recorded on the Condensed Consolidated Balance Sheets; expense for these leases is recognized on a straight-line basis over the lease term. As the rates implicit in its leases cannot be readily determined, the Corporation uses a secured incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Corporation uses separate discount rates for its U.S. operations and overseas operations. Certain real estate leases include one or more options to renew with renewal terms that can extend the lease term from one to ten years. The exercise of lease renewal options is at the Corporation's sole discretion. Certain real estate leases include an option to terminate the lease term earlier than the specified lease term for a fee. These options are not included as part of the lease term unless they are reasonably certain to be exercised. Many of the Corporation's real estate lease agreements include periods of rent holidays and payments that escalate over the lease term by specified amounts. While not significant, certain equipment leases have variable lease payments based on machine hours and certain real estate leases have rate changes based on the Consumer Price Index. The Corporation's lease agreements do not contain any material residual value guarantees. The Corporation has lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. On occasion, the Corporation rents or subleases certain real estate to third parties. This sublease portfolio consists mainly of operating leases for office furniture showrooms and is not significant. Leases included in the Condensed Consolidated Balance Sheet consisted of the following (in thousands):
Classification | September 28, 2019
Assets |
Right-of-use operating leases | $ | 72,087 |
Right-of-use finance leases | 2,157 |
Total Right-of-use operating / finance leases | $ | 74,244 |
Liabilities |
Current lease obligations - operating | $ | 20,506 |
Current lease obligations - finance | 501 |
Total Current lease obligations - operating / finance | 21,007 |
Long-term lease obligations - operating | 59,474 |
Long-term lease obligations - finance | 1,669 |
Total Long-term lease obligations - operating / finance | 61,143 |
Total lease obligations - operating / finance | $ | 82,150 |
Approximately 85 percent of the value of the leased assets is for real estate. The remaining 15 percent of the value of the leased assets is for equipment. Lease costs included in the Condensed Consolidated Statements of Comprehensive Income consisted of the following (in thousands):
|  | Three Months Ended |  | Nine Months Ended
| Classification | September 28, 2019 |  | September 28, 2019
Operating lease costs |  |  |  |
Fixed | Cost of sales | $ | 438 |  |  | $ | 1,366 |
| Selling and administrative expenses | 5,913 |  |  | 18,212 |
Short-term / variable | Cost of sales | 317 |  |  | 635 |
| Selling and administrative expenses | 385 |  |  | 807 |
Finance lease costs |  |  |  |
Amortization | Cost of sales, selling and administrative, and interest expense | 154 |  |  | 307 |
Less: Sublease income |  | 48 |  |  | 133 |
Total lease costs |  | $ | 7,159 |  |  | $ | 21,194 |
Maturity of lease liabilities as of September 28, 2019 is as follows (in thousands):
| Operating Leases (a) |  | Finance Leases (a) |  | Total
2019 (remaining portion of year) | $ | 6,590 |  |  | $ | 143 |  |  | $ | 6,733 |
2020 | 23,521 |  |  | 593 |  |  | 24,114 |
2021 | 16,792 |  |  | 564 |  |  | 17,356 |
2022 | 11,332 |  |  | 488 |  |  | 11,820 |
2023 | 9,388 |  |  | 436 |  |  | 9,824 |
Thereafter | 22,531 |  |  | 112 |  |  | 22,643 |
Total lease payments | 90,154 |  |  | 2,336 |  |  | 92,490 |
Less: Interest | 10,177 |  |  | 163 |  |  | 10,340 |
Present value of lease liabilities | $ | 79,977 |  |  | $ | 2,173 |  |  | $ | 82,150 |
(a) | At this time there are no operating or finance lease options to extend lease terms that are reasonably certain of being exercised, no r are there any legally binding minimum lease payments for operating or finance leases signed, but not yet commenced.
The following table summarizes the weighted-average discount rates and weighted-average remaining lease terms for operating and finance leases as of September 28, 2019:
| Weighted-Average Discount Rate (percent) |  | Weighted-Average Remaining Lease Term (years)
Operating leases | 4.2 | % |  | 5.5
Finance leases | 3.6 | % |  | 4.3
The following table summarizes cash paid for amounts included in the measurements of lease liabilities and the leased assets obtained in exchange for new operating and finance lease liabilities (in thousands):
| Nine Months Ended
| September 28, 2019
Cash paid for amounts included in the measurements of lease liabilities: |
Operating cash flows from operating / finance leases | $ | 20,072 |
Financing cash flows from finance leases | $ | 262 |
Leased assets obtained in exchange for new operating / finance lease liabilities | $ | 18,387 |
Accounting Policies and Practical Expedients Elected The Corporation elected to use the modified-retrospective method of adopting ASU 2016-02. It has been applied to all leases active on or after December 30, 2018, the start of the Corporation's fiscal year. The Corporation elected the following practical expedients as a result of adopting ASU 2016-02:
• | The Corporation has made an accounting election by class of underlying assets to not separate non-lease components of a contract from the lease components to which they relate for all classes of assets except for embedded leases.
• | The Corporation has elected not to restate prior period financial statements for the effects of the new standard. Required ASC 840 disclosures for periods prior to 2019 have been provided.
• | The Corporation has elected not to use hindsight in determining the lease term and in assessing the likelihood that a lessee purchase option will be exercised.
• | The Corporation has elected for all asset classes to not recognize ROU assets and lease liabilities for leases that at the acquisition date have a remaining lease term of twelve months or less.
Presented below are the final disclosures utilizing ASC 840 treatment which was provided in the Corporation's Annual Report on Form 10-K for the fiscal year ended December 29, 2018: Commitments for minimum rentals under non-cancelable leases were as follows (in thousands):
| Operating Leases
2019 | $ | 24,387 |
2020 | 18,250 |
2021 | 13,324 |
2022 | 9,082 |
2023 | 6,228 |
Thereafter | 10,469 |
Total minimum lease payments | $ | 81,740 |
There were no capitalized leases as of December 29, 2018 and December 30, 2017. Rent expense under ASC 840 was as follows (in thousands):
| 2018 |  |  | 2017 |  |  | 2016 |
Rent expense | $ | 31,027 |  |  | $ | 32,158 |  |  | $ | 35,288 |
There was no contingent rent expense under operating leases for the years 2018, 2017, and 2016. As part of the Corporation's continued efforts to drive efficiency and simplification, the Corporation entered into a sale-leaseback transaction in the first quarter of 2018, selling a manufacturing facility and subsequently leasing back a portion of the facility for a term of 10 years. The net proceeds from the sale of the facility of $16.9 million were reflected in "Proceeds from sale and license of property, plant, equipment, and intangibles" in the Consolidated Statements of Cash Flows in 2018. In accordance with ASC 840, the $5.1 million gain on the sale of the facility was deferred and was being amortized as a reduction to rent expense evenly over the term of the lease. In accordance with the ASU No. 2016-02 adoption, the remaining unamortized deferred gain related to the sale-leaseback as of December 29, 2018 was recognized directly in "Retained earnings" in the Condensed Consolidated Balance Sheets in the first quarter of 2019 as a cumulative-effect adjustment as the Corporation transferred control of the asset.

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 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
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

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 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration