Brunswick Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Leases (Notes)

Leases (Notes)

9 Months Ended

Sep. 28, 2019

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 September 28, 2019 is as follows:



(in millions)	Classification	Sep 28, 2019
Lease Assets
Operating lease assets	Operating lease assets	$	82.4

Lease Liabilities
Current operating lease liabilities	Accrued expenses	17.9
Non-current operating lease liabilities	Operating lease liabilities	69.7
Total lease liabilities		$	87.6

A summary of the Company's total lease cost for the three months and nine months ended September 28, 2019 is as follows:



(in millions)	Classification	Three Months Ended		Nine Months Ended
Operating lease cost	Selling, general, and administrative expense	$	3.5	$	10.2
	Cost of sales	9.2		19.0
Variable lease cost	Selling, general, and administrative expense	0.1		0.4
	Cost of sales	1.2		3.2
Total lease cost ^(A)		$	14.0	$	32.8

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

The Company's maturity analysis of its operating lease liabilities as of September 28, 2019 is as follows:



(in millions)
2019	$	5.9
2020	21.3
2021	18.5
2022	16.8
2023	14.3
Thereafter	23.8
Total lease payments	100.6
Less: Interest	(13.0		)
Present value of lease liabilities	$	87.6

The total weighted-average discount rate and remaining lease term for the Company's operating leases was 4.98 percent and 5.6 years, respectively, as of September 28, 2019. Total operating lease payments reflected in operating cash flows were $5.8 million and $16.7 million for the three months and nine months ended September 28, 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