Leases

12 Months Ended

Dec. 28, 2019

Leases [Abstract]

Leases

Leases

Under ASC 842, Leases, the Company determines if an arrangement is a lease obligation at inception of the contract. The Company enters into operating and finance lease commitments primarily for its manufacturing and office space, vehicles, and equipment leases that expire on various dates over the next 15 years, some of which include one or more options to extend the lease for up to 5 years. In addition, the Company leases land associated with certain of its buildings in Canada and China, under long-term leases expiring on various dates ranging from 2032 to 2062, one of which includes an assumed option to extend the lease for up to 10 years.

The Company's operating lease ROU assets and corresponding lease liabilities with contract terms greater than 12 months are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. In determining the present value of future lease payments, the Company utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease. In addition, the calculation may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company recognizes its operating lease expense for lease payments on a straight-line basis over the lease term. Variable lease costs are not included in fixed lease payments and, as a result, are excluded from the measurement of the ROU assets and lease liabilities. The Company expenses all variable lease costs as incurred, which were not material for 2019.

The Company's lease agreements often contain lease and non-lease components. For real estate and equipment leases, the Company accounts for the lease and non-lease components as a single lease component. For vehicle leases, the Company does not combine lease and non-lease components.

    The components of lease expense are as follows:

(In thousands)	December 28, 2019
Operating Lease Cost	$	5,534
Short-Term Lease Cost	715
Finance Lease Cost:
ROU asset amortization	1,213
Interest on lease liabilities	94
Total Finance Lease Cost	1,307
Total Lease Costs	$	7,556

The accompanying consolidated statement of income included expenses from operating leases of $5,575,000 in 2018 and $4,955,000 in 2017 recognized under Topic 840, the Company's previous lease accounting standard.

Supplemental cash flow information related to leases is as follows:

(In thousands)	December 28, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating cash flows from operating leases	$	5,636
Operating cash flows from finance leases	$	93
Financing cash flows from finance leases	$	1,144
ROU Assets Obtained in Exchange for Lease Obligations (a):
Operating leases	$	28,484
Finance leases	$	3,847

(a) Includes additions related to the transition adjustment for the adoption of ASC 842. The post-adoption additions of operating leases were $13,167,000, of which $10,994,000 related to ROU assets obtained as part of the acquisition of SMH. The post-adoption additions of finance leases were $2,496,000, of which $528,000 related to ROU assets obtained as part of the acquisition of SMH.

Supplemental balance sheet information related to leases is as follows:

(In thousands, except lease term and discount rate)	Balance Sheet Line Item	December 28, 2019
Operating Leases:
ROU assets	Other assets	$	27,139
Short-term liabilities	Other current liabilities	$	4,184
Long-term liabilities	Other long-term liabilities	24,411
Total operating lease liabilities		$	28,595
Finance Leases:
ROU assets, at cost	Property, plant, and equipment, at cost	$	3,775
ROU assets accumulated amortization	Less: accumulated depreciation and amortization	(1,475		)
ROU assets, net	Property, plant, and equipment, net	$	2,300
Short-term obligations	Current maturities of long-term obligations	$	1,116
Long-term obligations	Long-term obligations	1,192
Total finance lease liabilities		$	2,308
Weighted Average Remaining Lease Term:
Operating leases		10.2
Finance leases		2.3
Weighted Average Discount Rate:
Operating leases		3.96		%
Finance leases		4.10		%

As of December 28, 2019, future lease payments for lease liabilities are as follows:

	Operating			Finance
(In thousands)	Leases			Leases
2020	$	5,221		$	1,186
2021	4,406			815
2022	3,687			319
2023	3,108			85
2024	2,703			7
Thereafter	15,998			5
Total Future Lease Payments	35,123			2,417
Less: Imputed Interest	(6,528		)	(109		)
Present Value of Lease Payments	$	28,595		$	2,308

As of December 28, 2019, the Company had no significant operating and finance leases that had not yet commenced.

Supplemental information is presented for comparative purposes of the Company's future minimum lease payments for noncancelable operating leases under Topic 840, its previous lease accounting standard, as follows:

(In thousands)	December 29, 2018
2019	$	4,507
2020	3,275
2021	2,230
2022	1,579
2023	987
Thereafter	1,713
Total Future Minimum Lease Payments	$	14,291

Leases

Leases

Under ASC 842, Leases, the Company determines if an arrangement is a lease obligation at inception of the contract. The Company enters into operating and finance lease commitments primarily for its manufacturing and office space, vehicles, and equipment leases that expire on various dates over the next 15 years, some of which include one or more options to extend the lease for up to 5 years. In addition, the Company leases land associated with certain of its buildings in Canada and China, under long-term leases expiring on various dates ranging from 2032 to 2062, one of which includes an assumed option to extend the lease for up to 10 years.

The Company's operating lease ROU assets and corresponding lease liabilities with contract terms greater than 12 months are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. In determining the present value of future lease payments, the Company utilizes either the rate implicit in the lease if that rate is readily determinable or the Company’s incremental secured borrowing rate commensurate with the term of the underlying lease. In addition, the calculation may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company recognizes its operating lease expense for lease payments on a straight-line basis over the lease term. Variable lease costs are not included in fixed lease payments and, as a result, are excluded from the measurement of the ROU assets and lease liabilities. The Company expenses all variable lease costs as incurred, which were not material for 2019.

The Company's lease agreements often contain lease and non-lease components. For real estate and equipment leases, the Company accounts for the lease and non-lease components as a single lease component. For vehicle leases, the Company does not combine lease and non-lease components.

    The components of lease expense are as follows:

(In thousands)	December 28, 2019
Operating Lease Cost	$	5,534
Short-Term Lease Cost	715
Finance Lease Cost:
ROU asset amortization	1,213
Interest on lease liabilities	94
Total Finance Lease Cost	1,307
Total Lease Costs	$	7,556

The accompanying consolidated statement of income included expenses from operating leases of $5,575,000 in 2018 and $4,955,000 in 2017 recognized under Topic 840, the Company's previous lease accounting standard.

Supplemental cash flow information related to leases is as follows:

(In thousands)	December 28, 2019
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating cash flows from operating leases	$	5,636
Operating cash flows from finance leases	$	93
Financing cash flows from finance leases	$	1,144
ROU Assets Obtained in Exchange for Lease Obligations (a):
Operating leases	$	28,484
Finance leases	$	3,847

(a) Includes additions related to the transition adjustment for the adoption of ASC 842. The post-adoption additions of operating leases were $13,167,000, of which $10,994,000 related to ROU assets obtained as part of the acquisition of SMH. The post-adoption additions of finance leases were $2,496,000, of which $528,000 related to ROU assets obtained as part of the acquisition of SMH.

Supplemental balance sheet information related to leases is as follows:

(In thousands, except lease term and discount rate)	Balance Sheet Line Item	December 28, 2019
Operating Leases:
ROU assets	Other assets	$	27,139
Short-term liabilities	Other current liabilities	$	4,184
Long-term liabilities	Other long-term liabilities	24,411
Total operating lease liabilities		$	28,595
Finance Leases:
ROU assets, at cost	Property, plant, and equipment, at cost	$	3,775
ROU assets accumulated amortization	Less: accumulated depreciation and amortization	(1,475		)
ROU assets, net	Property, plant, and equipment, net	$	2,300
Short-term obligations	Current maturities of long-term obligations	$	1,116
Long-term obligations	Long-term obligations	1,192
Total finance lease liabilities		$	2,308
Weighted Average Remaining Lease Term:
Operating leases		10.2
Finance leases		2.3
Weighted Average Discount Rate:
Operating leases		3.96		%
Finance leases		4.10		%

As of December 28, 2019, future lease payments for lease liabilities are as follows:

	Operating			Finance
(In thousands)	Leases			Leases
2020	$	5,221		$	1,186
2021	4,406			815
2022	3,687			319
2023	3,108			85
2024	2,703			7
Thereafter	15,998			5
Total Future Lease Payments	35,123			2,417
Less: Imputed Interest	(6,528		)	(109		)
Present Value of Lease Payments	$	28,595		$	2,308

As of December 28, 2019, the Company had no significant operating and finance leases that had not yet commenced.

Supplemental information is presented for comparative purposes of the Company's future minimum lease payments for noncancelable operating leases under Topic 840, its previous lease accounting standard, as follows:

(In thousands)	December 29, 2018
2019	$	4,507
2020	3,275
2021	2,230
2022	1,579
2023	987
Thereafter	1,713
Total Future Minimum Lease Payments	$	14,291