Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.19.3
Leases
 9 Months Ended
Sep. 28, 2019
Leases [Abstract]  
Leases Leases
The Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. At inception of arrangements with vendors, the Company determines whether the contract is or contains a lease based on each party’s rights and obligations under the arrangement. At inception, any new additional operating lease liabilities and corresponding ROU assets are based on the present value of the remaining minimum rental payments. If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the remaining fixed minimum rental payments used in the calculation of the new lease liability, include fixed payments and variable payments (if the variable payments are based on an index), over the remaining lease term. While we do have real estate leases with options to purchase the facility at a market value at the date of exercise, these are not included in the calculation of the lease liability, as these options are not expected to be exercised as of the January 1, 2019 transition date.
The present value of the Company’s lease liability at transition was calculated using a weighted-average incremental borrowing rate of 3.7%. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution as of the transition date. As of September 28, 2019, the Company recognized an operating right-of-use asset and lease liability of approximately $25.1 million and $25.4 million, respectively. The Company's operating lease liability increased approximately $4.1 million and $9.7 million as a result of acquiring right-of-use-assets from new leases entered into during the three and nine months ended September 28, 2019. As of September 28, 2019, the Company recognized a financing right-of-use asset and lease liability of approximately $2.7 million and $5.2 million, respectively. No new financing lease liabilities were entered into during the three and nine months ended September 28, 2019. The right-of-use asset is included within Other assets in the Consolidated Condensed Balance Sheets, while the lease liability is included within Other current liabilities and Other liabilities, as appropriate.
As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases.
The following is a summary of the Company's total lease costs:
Nine months ended Three months ended
(In thousands) September 28, 2019 September 28, 2019
Finance Lease Cost:
Amortization of Right-of-use Assets $ 765    $ 255   
Interest on Lease Liabilities 243 76
Total Finance Lease Cost 1,008    331   
Operating Lease Cost 3,622 1,216
Variable Lease Cost 958 279
Short-term Lease Cost (excluding month-to-month) 118 33
Less Sublease and Rental (Income) Expense (301)   216   
Total Operating Lease Cost $ 4,397    $ 1,744   
Total Net Lease Cost $ 5,405    $ 2,075   
The following is a summary of cash paid for amounts included in the measurement of lease liabilities:
Nine months ended
(In thousands) September 28, 2019
Operating Cash Flows Used for Finance Leases $ 1,008   
Operating Cash Flows Used for Operating Leases
 $ 2,767   
Financing Cash Flows Used for Finance Leases
 $ 1,284   
The weighted-average remaining term for the Company's operating and financing leases are approximately 8 years and 3 years, respectively.
The following is a summary of the Company's maturity of lease liabilities:
(In thousands) Operating Leases Financing Leases
2019 $ 1,192    $ 522   
2020 4,142    2,128   
2021 4,121    2,181   
2022 3,904    743   
2023 3,677    —   
Thereafter 11,981    —   
Total Lease Payments $ 29,017    $ 5,574   
Less: Interest 3,624    380   
Total Lease Liability $ 25,393    $ 5,194   
Leases Leases
The Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. At inception of arrangements with vendors, the Company determines whether the contract is or contains a lease based on each party’s rights and obligations under the arrangement. At inception, any new additional operating lease liabilities and corresponding ROU assets are based on the present value of the remaining minimum rental payments. If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the remaining fixed minimum rental payments used in the calculation of the new lease liability, include fixed payments and variable payments (if the variable payments are based on an index), over the remaining lease term. While we do have real estate leases with options to purchase the facility at a market value at the date of exercise, these are not included in the calculation of the lease liability, as these options are not expected to be exercised as of the January 1, 2019 transition date.
The present value of the Company’s lease liability at transition was calculated using a weighted-average incremental borrowing rate of 3.7%. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution as of the transition date. As of September 28, 2019, the Company recognized an operating right-of-use asset and lease liability of approximately $25.1 million and $25.4 million, respectively. The Company's operating lease liability increased approximately $4.1 million and $9.7 million as a result of acquiring right-of-use-assets from new leases entered into during the three and nine months ended September 28, 2019. As of September 28, 2019, the Company recognized a financing right-of-use asset and lease liability of approximately $2.7 million and $5.2 million, respectively. No new financing lease liabilities were entered into during the three and nine months ended September 28, 2019. The right-of-use asset is included within Other assets in the Consolidated Condensed Balance Sheets, while the lease liability is included within Other current liabilities and Other liabilities, as appropriate.
As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases.
The following is a summary of the Company's total lease costs:
Nine months ended Three months ended
(In thousands) September 28, 2019 September 28, 2019
Finance Lease Cost:
Amortization of Right-of-use Assets $ 765    $ 255   
Interest on Lease Liabilities 243 76
Total Finance Lease Cost 1,008    331   
Operating Lease Cost 3,622 1,216
Variable Lease Cost 958 279
Short-term Lease Cost (excluding month-to-month) 118 33
Less Sublease and Rental (Income) Expense (301)   216   
Total Operating Lease Cost $ 4,397    $ 1,744   
Total Net Lease Cost $ 5,405    $ 2,075   
The following is a summary of cash paid for amounts included in the measurement of lease liabilities:
Nine months ended
(In thousands) September 28, 2019
Operating Cash Flows Used for Finance Leases $ 1,008   
Operating Cash Flows Used for Operating Leases
 $ 2,767   
Financing Cash Flows Used for Finance Leases
 $ 1,284   
The weighted-average remaining term for the Company's operating and financing leases are approximately 8 years and 3 years, respectively.
The following is a summary of the Company's maturity of lease liabilities:
(In thousands) Operating Leases Financing Leases
2019 $ 1,192    $ 522   
2020 4,142    2,128   
2021 4,121    2,181   
2022 3,904    743   
2023 3,677    —   
Thereafter 11,981    —   
Total Lease Payments $ 29,017    $ 5,574   
Less: Interest 3,624    380   
Total Lease Liability $ 25,393    $ 5,194