FY2021 10-K Document - FINAL 11 15 21 - Flipbook - Page 54
Table of Contents
Note 6 - Property, Plant and Equipment
Property, plant and equipment consists of:
October 2,
2021
$
35,762
506,450
791,984
179,066
1,513,262
(867,484)
$
645,778
Land
Buildings and improvements
Machinery and equipment
Computer equipment and software
Property, plant and equipment, at cost
Less accumulated depreciation and amortization
Property, plant and equipment, net
October 3,
2020
$
37,463
476,659
782,194
158,683
1,454,999
(854,501)
$
600,498
In 2021, we recorded $356 of impairment charges for owned assets, based on expected cash flows over the
remaining life of the assets in relation to a decline in the related business. In 2020, we recorded $25,419 of
impairment charges for owned and finance lease ROU assets, based on expected cash flows over the remaining life
of the assets in relation to the impact of the COVID-19 pandemic. In 2019, we recorded $4,464 relating to impairment
charges for capitalized software that was not placed in service.
Note 7 - Leases
We lease certain manufacturing facilities, office space and machinery and equipment globally. At inception we
evaluate whether a contractual arrangement contains a lease. Specifically, we consider whether we control the
underlying asset and have the right to obtain substantially all the economic benefits or outputs from the asset. If the
contractual arrangement contains a lease, we then determine the classification of the lease, operating or finance,
using the classification criteria described in ASC 842. We then determine the term of the lease based on terms and
conditions of the contractual arrangement, including whether the options to extend or terminate the lease are
reasonably certain to be exercised. We have elected to not separate lease components from non-lease components,
such as common area maintenance charges and instead, account for the lease and non-lease components as a
single component.
Our lease right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and our lease
liabilities represent our obligation to make lease payments. Operating lease ROU assets are included in Operating
lease right-of-use assets and operating lease liabilities are included in Accrued liabilities and other and Other longterm liabilities on the Consolidated Balance Sheets. Finance lease ROU assets are included in Property, plant and
equipment and finance lease liabilities are included in Accrued liabilities and other and Other long-term liabilities on
the Consolidated Balance Sheets. Operating lease cost is included in Cost of sales and Selling, general and
administrative on the Consolidated Statements of Earnings. Finance lease cost is included in Cost of sales, Selling,
general and administrative and Interest on the Consolidated Statements of Earnings.
The ROU assets and lease liabilities for both operating and finance leases are recognized as of the commencement
date at the net present value of the fixed minimum lease payments over the term of the lease, using the discount rate
described below. Variable lease payments are recorded in the period in which the obligation for the payment is
incurred. Variable lease payments based on an index or rate are initially measured using the index or rate as of the
commencement date of the lease and included in the fixed minimum lease payments. For short-term leases that have
a term of 12 months or less as of the commencement date, we do not recognize a ROU asset or lease liability on our
balance sheet; we recognize expense as the lease payments are made over the lease term.
The discount rate used to calculate the present value of our leases is the rate implicit in the lease. If the information
necessary to determine the rate implicit in the lease is not available, we use our incremental borrowing rate for
collateralized debt, which is determined using our credit rating and other information available as of the lease
commencement date.
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