Leases (Notes)

6 Months Ended

Jun. 27, 2019

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

The Company determines if an arrangement is a lease at the inception of a signed agreement. Operating leases are included in ROU assets (long-term), short-term operating lease liabilities, and long-term operating lease liabilities on the Company’s consolidated balance sheet. Finance leases are included in Property, Plant and Equipment, current maturities of long-term debt, and long-term debt.

ROU assets represent the right of the Company to use an underlying asset for the length of the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

To determine the present value of lease payments, the Company uses its estimated incremental borrowing rate or the implicit rate, if readily determinable. The estimated incremental borrowing rate is based on information available at the lease commencement date, including any recent debt issuances and publicly available data for instruments with similar characteristics. The ROU asset also includes any lease payments made and excludes lease incentives.

The Company's lease terms may include options to extend or terminate the lease and, when it is reasonably certain that an option will be exercised, those options are included in the net present value calculation. Leases with a term of 12 months or less, which are primarily related to automobiles and manufacturing equipment, are not recorded on the balance sheet. The aggregate amount of lease cost for leases with a term of 12 months or less is not material.

The Company has lease agreements that include lease and non-lease components, which are generally accounted for separately. For certain leases (primarily related to IT equipment), the Company does account for the lease and non-lease components as a single lease component. A portfolio approach is applied to effectively account for the ROU assets and liabilities for those specific leases referenced above. The Company does not have any material leases containing variable lease payments or residual value guarantees. The Company also does not have any material subleases.

The Company currently has operating and finance leases for items such as manufacturing facilities, corporate offices, manufacturing equipment, transportation equipment, and vehicles. The Company's active leases have remaining lease terms that range between less than one year to 18 years, some of which include options to extend the leases for up to 30 years, and some of which include options to terminate the leases within one year.

Comparable information presented in the financial statements for periods prior to January 1, 2019 represent legacy GAAP treatment of leases. For more information on the effective date and transition approach for implementation, see Note 2, Adoption of New Accounting Standards.

For the three months ended June 27, 2019, total net lease cost was $5.1. This was comprised of $2.2 of operating lease costs, $2.4 amortization of assets related to finance leases, and $0.5 interest on finance lease liabilities. For the six months ended June 27, 2019, total net lease cost was $9.5. This was comprised of $4.4 of operating lease costs, $4.2 amortization of assets related to finance leases, and $0.9 interest on finance lease liabilities.

Supplemental cash flow information related to leases was as follows:

	For the Three Months Ended		For the Six Months Ended
	June 27, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2.1	$	4.3
Operating cash flows from finance leases	$	0.5	$	0.9
Financing cash flows from finance leases	$	2.0	$	3.8
ROU assets obtained in exchange for lease obligations:
Operating leases	$	0.6	$	0.7
Finance leases	$	—	$	—

Supplemental balance sheet information related to leases:

	June 27, 2019
Finance leases:
Property and equipment, gross	$	61.1
Accumulated amortization	(14.6		)
Property and equipment, net	$	46.5

The weighted average remaining lease term as of June 27, 2019 for operating and finance leases was 10.6 years and 5.1 years, respectively. The weighted average discount rate as of June 27, 2019 for operating and finance leases was 5.6% and 4.1%, respectively. See Note 15, Debt, for current and non-current finance lease obligations.

As of June 27, 2019, remaining maturities of lease liabilities were as follows:

	2019		2020		2021		2022		2023		2024 and thereafter		Total Lease Payments		Less: Imputed Interest			Total Lease Obligations
Operating Leases	$	4.2	$	7.9	$	7.3	$	7.0	$	5.9	$	35.3	$	67.6	$	(17.2	)	$	50.4
Financing Leases	$	5.3	$	10.6	$	10.5	$	9.8	$	8.4	$	6.6	$	51.2	$	(5.1	)	$	46.1

As of June 27, 2019, the Company had additional operating and financing lease commitments that have not yet commenced of approximately $32.5 and $131.4 for manufacturing equipment and facilities which are in various phases of construction or customization for the Company's ultimate use, with lease terms between 3 and 15 years. The Company's involvement in the construction and design process for these assets is generally limited to project management.