SUBSEQUENT EVENTS

3 Months Ended

Mar. 29, 2020

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS

Subsequent to March 29, 2020, we received approval from the Bankruptcy Court to reject several of our operating leases and five of our financing obligations. These lease rejections, upon actual termination, will be accounted for as lease terminations or modifications in accordance with ASC 842 during the quarters ending June 28, 2020, and September 27, 2020, as applicable. 

As of March 29, 2020, these rejected operating leases represented approximately $24.0 million and $31.8 million of ROU assets and operating lease liabilities,  respectively, within our condensed consolidated balance sheet. We are still evaluating the full impact that the ASC 842 modification and termination accounting will have on our ROU asset and lease liability balances during the second and third quarters of 2020. In addition to any gains or losses recognized from the termination of the leases, we also estimate that we will incur $9.0 to $11.0 million in estimated damages on the rejected leases during the second and third quarters of 2020, as applicable.  

As of March 29, 2020, the rejected leases that are accounted for as financing obligations represented $31.0 million of property, plant and equipment (“PP&E”), net and $41.9 million of financing obligations, within our condensed consolidated balance sheet. We expect the reduction of PP&E and the financing obligation will result in a net non-cash gain of approximately $11.0 million during the quarter and six months ending June 28, 2020. This net gain will be partially offset by $3.3 million in estimated damages on the rejected leases during the second quarter of 2020.