Quarterly report pursuant to Section 13 or 15(d)

Leases (Notes)

v3.19.2
Leases (Notes)
6 Months Ended
Jun. 29, 2019
Leases [Abstract]  
Lessee, Operating Leases [Text Block] Leases

The Company has operating lease agreements for offices, branches, factories, distribution and service facilities and certain personal property. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. Finance leases are not material to the Company's condensed consolidated financial statements.

Several leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of lease renewal options is at our sole discretion. Certain of our lease agreements include rental payments that vary based on changes in volume activity, storage activity, or changes in the Consumer Price Index (CPI) or other indices. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

A summary of the Company's lease assets and lease liabilities as of June 29, 2019 is as follows:
(in millions)
Classification
 
June 29, 2019
Lease Assets
 
 
 
Operating lease assets
Operating lease assets
 
$
80.4

 
 
 
 
Lease Liabilities
 
 
 
Current operating lease liabilities
Accrued expenses
 
18.2

Non-current operating lease liabilities
Operating lease liabilities
 
67.1

Total lease liabilities
 
 
$
85.3



A summary of the Company's total lease cost for the three months and six months ended June 29, 2019 is as follows:
(in millions)
Classification
 
Three Months Ended
 
Six Months Ended
Operating lease cost
Selling, general, and administrative expense
 
$
1.5

 
$
3.1

 
Cost of sales
 
7.7

 
12.6

Variable lease cost
Selling, general, and administrative expense
 
0.1

 
0.3

 
Cost of sales
 
1.0

 
2.0

Total lease cost (A)
 
 
$
10.3

 
$
18.0


(A) Includes total short-term lease cost which is immaterial.

The Company's maturity analysis of its operating lease liabilities as of June 29, 2019 is as follows:
(in millions)
 
2019
$
11.7

2020
19.9

2021
17.1

2022
15.3

2023
12.9

Thereafter
21.0

Total lease payments
97.9

Less: Interest
(12.6
)
Present value of lease liabilities
$
85.3



The total weighted-average discount rate and remaining lease term for the Company's operating leases was 4.96 percent and 5.6 years, respectively, as of June 29, 2019. Total operating lease payments reflected in operating cash flows were $6.1 million and $11.5 million for the three months and six months ended June 29, 2019, respectively.

The following represents the Company's future minimum rental payments at December 31, 2018 for agreements classified as operating leases under ASC 840 with non-cancelable terms in excess of one year:
(in millions)
 
2019
$
31.4

2020
24.5

2021
21.0

2022
14.7

2023
11.4

Thereafter
20.1

Total (not reduced by minimum sublease income of $0.1)
$
123.1