LEASES

9 Months Ended

Jul. 04, 2021

Leases [Abstract]

LEASES

LEASES

The Company has leases primarily pertaining to manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery, computer, and office equipment that expire at various times through February 28, 2047. We have identified embedded operating leases within certain logistic agreements for warehouses and information technology services arrangements and recognized assets identified in the arrangements as part of operating right-of-use ("ROU") assets on the Company’s Condensed Consolidated Statements of Financial Position as of July 4, 2021 and September 30, 2020. We elected to exclude certain supply agreements that contain embedded leases for manufacturing facilities or dedicated manufacturing lines from our ROU asset and liability calculation based on the insignificant impact to our financial statements.

The following is a summary of the leases recognized on the Company’s Condensed Consolidated Statements of Financial Position as of July 4, 2021 and September 30, 2020:

(in millions)	Line Item	July 4, 2021		September 30, 2020
Assets
Operating	Operating lease assets	$	118.3	$	103.8
Finance	Property, plant and equipment, net	127.5		136.3
Total leased assets		$	245.8	$	240.1
Liabilities
Current
Operating	Other current liabilities	$	25.8	$	22.4
Finance	Current portion of long-term debt	11.7		12.1
Long-term
Operating	Long-term operating lease liabilities	99.7		88.8
Finance	Long-term debt, net of current portion	142.2		148.4
Total lease liabilities		$	279.4	$	271.7

As of July 4, 2021, the Company had $12.1 million of commitments related to leases executed that have not yet commenced.

The Company records its operating lease expense and amortization of finance lease ROU assets within Cost of Goods Sold or Operating Expenses in the Condensed Consolidated Statements of Income depending on the nature and use of the underlying asset. The Company records its finance interest cost within interest expense in the Condensed Consolidated Statements of Income.

The components of lease costs recognized in the Condensed Consolidated Statements of Income for the three and nine month periods ended July 4, 2021 and June 28, 2020 are as follows:

	Three Month Periods Ended				Nine Month Periods Ended
(in millions)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Operating lease cost	$	8.7	$	6.2	$	23.6	$	18.8
Finance lease cost
Amortization of leased assets	3.2		3.7		10.7		10.7
Interest on lease liability	2.2		2.3		6.6		6.7
Variable lease cost	3.6		3.3		9.5		9.1
Total lease cost	$	17.7	$	15.5	$	50.4	$	45.3

During the three month periods ended July 4, 2021 and June 28, 2020, the Company recognized income attributable to leases and sub-leases of $0.6 million. During the nine month periods ended July 4, 2021 and June 28, 2020, the Company recognized income attributable to leases and sub-leases of $1.7 million and $1.6 million, respectively. Income from leases and sub-leases is recognized as Other Non-Operating Income in the Condensed Consolidated Statements of Income.

The following is a summary of the Company’s cash paid for amounts included in the measurement of lease liabilities recognized in the Condensed Consolidated Statement of Cash Flow, including supplemental non-cash activity related to operating leases, for the three and nine month periods ending July 4, 2021 and June 28, 2020:

	Three Month Periods Ended				Nine Month Periods Ended
(in millions)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Operating cash flow from operating leases	$	9.9	$	5.5	$	24.1	$	17.3
Operating cash flows from finance leases	2.2		2.2		6.7		6.8
Financing cash flows from finance leases	3.1		3.8		8.8		10.7
Supplemental non-cash flow disclosure
Acquisition of operating lease asset through lease obligations	21.9		2.2		32.9		6.4

The following is a summary of weighted-average lease term and discount rate at July 4, 2021 and September 30, 2020:

	July 4, 2021		September 30, 2020
Weighted average remaining lease term
Operating leases	6.4 years		6.6 years
Finance leases	15.2 years		15.6 years
Weighted average discount rate
Operating leases	4.3	%	4.7	%
Finance leases	5.7	%	5.6	%

At July 4, 2021, future lease payments under operating and finance leases were as follows:

(in millions)	Finance Leases		Operating Leases
2021 remaining balance	$	5.3	$	8.4
2022	18.6		29.3
2023	17.6		27.1
2024	17.1		18.3
2025	15.3		14.9
Thereafter	167.2		46.8
Total lease payments	241.1		144.8
Amount representing interest	(87.2)		(19.3)
Total minimum lease payments	$	153.9	$	125.5

LEASES

LEASES

The Company has leases primarily pertaining to manufacturing facilities, distribution centers, office space, warehouses, automobiles, machinery, computer, and office equipment that expire at various times through February 28, 2047. We have identified embedded operating leases within certain logistic agreements for warehouses and information technology services arrangements and recognized assets identified in the arrangements as part of operating right-of-use ("ROU") assets on the Company’s Condensed Consolidated Statements of Financial Position as of July 4, 2021 and September 30, 2020. We elected to exclude certain supply agreements that contain embedded leases for manufacturing facilities or dedicated manufacturing lines from our ROU asset and liability calculation based on the insignificant impact to our financial statements.

The following is a summary of the leases recognized on the Company’s Condensed Consolidated Statements of Financial Position as of July 4, 2021 and September 30, 2020:

(in millions)	Line Item	July 4, 2021		September 30, 2020
Assets
Operating	Operating lease assets	$	118.3	$	103.8
Finance	Property, plant and equipment, net	127.5		136.3
Total leased assets		$	245.8	$	240.1
Liabilities
Current
Operating	Other current liabilities	$	25.8	$	22.4
Finance	Current portion of long-term debt	11.7		12.1
Long-term
Operating	Long-term operating lease liabilities	99.7		88.8
Finance	Long-term debt, net of current portion	142.2		148.4
Total lease liabilities		$	279.4	$	271.7

As of July 4, 2021, the Company had $12.1 million of commitments related to leases executed that have not yet commenced.

The Company records its operating lease expense and amortization of finance lease ROU assets within Cost of Goods Sold or Operating Expenses in the Condensed Consolidated Statements of Income depending on the nature and use of the underlying asset. The Company records its finance interest cost within interest expense in the Condensed Consolidated Statements of Income.

The components of lease costs recognized in the Condensed Consolidated Statements of Income for the three and nine month periods ended July 4, 2021 and June 28, 2020 are as follows:

	Three Month Periods Ended				Nine Month Periods Ended
(in millions)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Operating lease cost	$	8.7	$	6.2	$	23.6	$	18.8
Finance lease cost
Amortization of leased assets	3.2		3.7		10.7		10.7
Interest on lease liability	2.2		2.3		6.6		6.7
Variable lease cost	3.6		3.3		9.5		9.1
Total lease cost	$	17.7	$	15.5	$	50.4	$	45.3

During the three month periods ended July 4, 2021 and June 28, 2020, the Company recognized income attributable to leases and sub-leases of $0.6 million. During the nine month periods ended July 4, 2021 and June 28, 2020, the Company recognized income attributable to leases and sub-leases of $1.7 million and $1.6 million, respectively. Income from leases and sub-leases is recognized as Other Non-Operating Income in the Condensed Consolidated Statements of Income.

The following is a summary of the Company’s cash paid for amounts included in the measurement of lease liabilities recognized in the Condensed Consolidated Statement of Cash Flow, including supplemental non-cash activity related to operating leases, for the three and nine month periods ending July 4, 2021 and June 28, 2020:

	Three Month Periods Ended				Nine Month Periods Ended
(in millions)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020
Operating cash flow from operating leases	$	9.9	$	5.5	$	24.1	$	17.3
Operating cash flows from finance leases	2.2		2.2		6.7		6.8
Financing cash flows from finance leases	3.1		3.8		8.8		10.7
Supplemental non-cash flow disclosure
Acquisition of operating lease asset through lease obligations	21.9		2.2		32.9		6.4

The following is a summary of weighted-average lease term and discount rate at July 4, 2021 and September 30, 2020:

	July 4, 2021		September 30, 2020
Weighted average remaining lease term
Operating leases	6.4 years		6.6 years
Finance leases	15.2 years		15.6 years
Weighted average discount rate
Operating leases	4.3	%	4.7	%
Finance leases	5.7	%	5.6	%

At July 4, 2021, future lease payments under operating and finance leases were as follows:

(in millions)	Finance Leases		Operating Leases
2021 remaining balance	$	5.3	$	8.4
2022	18.6		29.3
2023	17.6		27.1
2024	17.1		18.3
2025	15.3		14.9
Thereafter	167.2		46.8
Total lease payments	241.1		144.8
Amount representing interest	(87.2)		(19.3)
Total minimum lease payments	$	153.9	$	125.5