| Significant Accounting Policies [Text Block] | 2.
Summary of Significant Accounting Policies General The consolidated financial
statements include the accounts of RBC Bearings Incorporated, Roller Bearing Company of America, Inc. (“RBCA”)
and its wholly-owned subsidiaries, Industrial Tectonics Bearings Corporation (“ITB”), RBC Nice Bearings, Inc.
(“Nice”), RBC Precision Products - Bremen, Inc. (“Bremen (MBC)”), RBC Precision Products - Plymouth, Inc.
(“Plymouth”), RBC Lubron Bearing Systems, Inc. (“Lubron”), RBC Oklahoma, Inc. (“RBC Oklahoma”),
RBC Aircraft Products, Inc. (“API”), RBC Southwest Products, Inc. (“SWP”), All Power Manufacturing
Co. (“All Power”), RBC Aerostructures LLC (“AeroS”), Western Precision Aero LLC (“WPA”), Climax
Metal Products Company (“CMP”), RBC Turbine Components LLC (“TCI”), Sonic Industries, Inc. (“Sonic”),
Sargent Aerospace and Defense LLC (“Sargent”), Airtomic LLC. (“Airtomic”), Schaublin Holding S.A. and
its wholly-owned subsidiaries Schaublin SA, RBC Bearings Polska sp. Z.o.o., RBC France SAS, Vianel Holding AG, Beck Bühler
Mutschler Capital AG, Bär und Mettler AG, MBM Monstein Bär Mettler Modulare Werkzeugsysteme AG, Swiss Tool Systems AG
- Switzerland and Schaublin GmbH (“Schaublin”), RBC de Mexico S DE RL DE CV (“Mexico”), RBC Bearings U.K.
Limited, Allpower de Mexico S DE RL DE CV (“Tecate”) and RBC Bearings Canada, Inc. Divisions of RBCA include: RBC
Corporate, RBC E-Shop, RBC Aerospace sales office and warehouse, Transport Dynamics (“TDC”), Heim (“Heim Bearings
Company”), Engineered Components (“ECD”), RBC Aerocomponents (“AeroC”), PIC Design (“PIC Design”),
RBC Hartsville, RBC West Trenton, RBC Bishopsville, RBC Eastern Distribution Center, Shanghai Representative office of Roller
Bearing Company of America, Inc. (“RBC Shanghai”) and RBC Grand Prarie TX location. U.S. Bearings (“USB”)
is a division of SWP and Schaublin USA is a division of Nice. All intercompany balances and transactions have been eliminated
in consolidation. The
Company has a fiscal year consisting of 52 or 53 weeks, ending on the Saturday closest to March 31. Based on this policy,
fiscal years 2020, 2019 and 2018 each contained 52 weeks. The amounts are shown in thousands, unless otherwise indicated. Use
of Estimates The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities,
at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Estimates are used for, but not limited to, the accounting for the allowance for doubtful
accounts, valuation of inventories, accrued expenses, goodwill and intangible assets, depreciation and amortization, income taxes
and tax reserves, pension and postretirement obligations and the valuation of options. Revenue
Recognition A
contract with a customer exists when there is commitment and approval from both parties involved, the rights of the parties are
identified, payment terms are defined, the contract has commercial substance and collectability of consideration is probable.
The Company has determined that the contract with the customer is established when the customer purchase order is accepted or
acknowledged. Long-term agreements (LTAs) are used by the Company and certain of its customers to reduce their supply uncertainty
for a period of time, typically multiple years. While these LTAs define commercial terms including pricing, termination rights
and other contractual requirements, they do not represent the contract with the customer for revenue recognition purposes. When
the Company accepts or acknowledges the customer purchase order, the type of good or service is defined on a line-by-line basis.
Individual performance obligations are established by virtue of the individual line items identified on the sales order acknowledgment
at the time of issuance. The majority of the Company’s revenue relates to the sale of goods and contains a single performance
obligation for each distinct good. The remainder of the Company’s revenue from customers is generated from services performed.
These services include repair and refurbishment work performed on customer-controlled assets as well as design and test work.
The performance obligations for these services are also identified on the sales order acknowledgement at the time of issuance
on a line-by-line basis. Transaction price reflects the amount of consideration that
the Company expects to be entitled to in exchange for transferred goods or services. A contract’s transaction price is allocated
to each distinct performance obligation and revenue is recognized as the performance obligation is satisfied. For the majority
of our contracts, the Company either provides distinct goods or services. Where both distinct goods and services are provided,
we separate the contract into more than one performance obligation (i.e., a good or service is individually listed in a contract
or sold individually to a customer). The Company generally sells products and services with observable standalone selling prices. The
performance obligations for the majority of RBC’s product sales are satisfied at the point in time in which the
products are shipped, consistent with the pattern of revenue recognition under the previous accounting standard. The Company
has determined that the customer obtains control upon shipment of the product based on the shipping terms (either when it
ships from RBC’s dock or when the product arrives at the customer’s dock) and recognizes revenue accordingly.
Once a product has shipped, the customer is able to direct the use of, and obtain substantially all of the remaining benefits
from, the asset. Approximately 95% and 94% of the Company’s revenue was recognized in this manner based on sales for
the years ended March 28, 2020 and March 30, 2019, respectively. The
Company has determined performance obligations are satisfied over time for customer contracts where RBC provides services to customers
and also for a limited number of product sales. RBC has determined revenue recognition over time is appropriate for our service
revenue contracts as they create or enhance an asset that the customer controls throughout the duration of the contract. Approximately
5% and 6% of the Company’s revenue was recognized in this manner based on sales for the years ended March 28, 2020 and March
30, 2019, respectively. Revenue recognition over time is appropriate for customer contracts with product sales in which the product
sold has no alternative use to RBC without significant economic loss and an enforceable right to payment exists, including a normal
profit margin from the customer, in the event of contract termination. These types of contracts comprised less than 1% of total
sales for the years ended March 28, 2020 and March 30, 2019, respectively. For both of these types of contracts, revenue is recognized
over time based on the extent of progress towards completion of the performance obligation. The Company utilizes the cost-to-cost
measure of progress for over-time revenue recognition contracts as we believe this measure best depicts the transfer of control
to the customer, which occurs as we incur costs on contracts. Revenues, including profits, are recorded proportionally as costs
are incurred. Costs to fulfill include labor, materials, subcontractors’ costs, and other direct and indirect costs. Contract
costs are the incremental costs of obtaining and fulfilling a contract (i.e., costs that would not have been incurred if the contract
had not been obtained) to provide goods and services to customers. Contract costs largely consist of design and development costs
for molds, dies and other tools that RBC will own and that will be used in producing the products under the supply arrangements.
These contract costs are amortized to expense on a systematic and rational basis over a period consistent with the transfer to
the customer of the goods or services to which the asset relates. Costs incurred to obtain a contract are primarily related to
sales commissions and are expensed as incurred as they are generally not tied to specific customer contracts. These costs are
included within selling, general and administrative costs on the consolidated statements of operations. In
certain contracts, the Company facilitates shipping and handling activities after control has transferred to the customer. The
Company has elected to record all shipping and handling activities as costs to fulfill a contract. In situations where the shipping
and handling costs have not been incurred at the time revenue is recognized, the estimated shipping and handling costs are accrued. Prior
to the adoption of ASC Topic 606, the Company recognized revenue in accordance with ASC Topic 605. Our accounting policy was as
follows: The
Company recognizes revenue only after the following four basic criteria are met:
● Persuasive
evidence of an arrangement exists;
● Delivery
has occurred or services have been rendered;
● The
seller’s price to the buyer is fixed or determinable; and
● Collectability
is reasonably assured. Revenue
is recognized upon the passage of title, which generally is at the time of shipment, except for certain customers for which it
occurs when the products reach their destination. Accounts receivable, net of applicable allowances, is recorded when revenue
is recorded. We
also on occasion record deferred revenue on our balance sheet as a liability. Deferred revenue represents progress payments received,
primarily from one customer, to cover purchases of raw materials per the terms of multi-year long-term contracts. Revenue associated
with these agreements is recognized in accordance with the criteria discussed above. Cash
and Cash Equivalents The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
The Company maintains its cash accounts primarily with Bank of America, N.A., Credit Suisse Group AG and Wells Fargo & Company.
The domestic balances are insured by the Federal Deposit Insurance Company up to $250. The Company has not experienced any losses
in such accounts. Accounts
Receivable, Net and Concentration of Credit Risk Accounts
receivable include amounts billed and currently due from customers. The amounts due are stated at their estimated net realizable
value. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers
to make required payments. The Company reviews the collectability of its receivables on an ongoing basis taking into account a
combination of factors. The Company reviews potential problems, such as past due accounts, a bankruptcy filing or deterioration
in the customer’s financial condition, to ensure the Company is adequately accrued for potential loss. Accounts are considered
past due based on when payment was originally due. If a customer’s situation changes, such as a bankruptcy or creditworthiness,
or there is a change in the current economic climate, the Company may modify its estimate of the allowance for doubtful accounts.
The Company will write-off accounts receivable after reasonable collection efforts have been made and the accounts are deemed
uncollectible. The
Company sells to a large number of OEMs and distributors who service the aftermarket. The Company’s credit risk associated
with accounts receivable is minimized due to its customer base and wide geographic dispersion. The Company performs ongoing credit
evaluations of its customers’ financial condition and generally does not require collateral or charge interest on outstanding
amounts. The Company had no concentrations of credit risk with any one customer greater than approximately 7% of accounts receivables
at March 28, 2020 and 7% at March 30, 2019. Inventory Inventories
are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The Company accounts
for inventory under a full absorption method, and records adjustments to the value of inventory based upon past sales history
and forecasted plans to sell our inventories. The physical condition, including age and quality, of the inventories is also considered
in establishing its valuation. These adjustments are estimates, which could vary significantly, either favorably or unfavorably,
from actual requirements if future economic conditions, customer inventory levels or competitive conditions differ from our expectations. Contract
Assets (Unbilled Receivables) Pursuant
to the over-time revenue recognition model, revenue may be recognized prior to the customer being invoiced. An unbilled receivable
is recorded to reflect revenue that is recognized when (1) the cost-to-cost method is applied and (2) such revenue exceeds the
amount invoiced to the customer. Contract assets are included within prepaid expenses and other current assets or other assets
on the consolidated balance sheets. Property,
Plant and Equipment Property,
plant and equipment are recorded at cost. Depreciation and amortization of property, plant and equipment, including equipment
under finance leases (capital leases prior to the adoption of ASC 842), is provided for by the straight-line method over the
estimated useful lives of the respective assets or the lease term, if shorter. Depreciation of assets under capital leases is
reported within depreciation and amortization. The cost of equipment under finance leases is equal to the lower of the net
present value of the minimum lease payments or the fair market value of the leased equipment at the inception of the lease.
Expenditures for normal maintenance and repairs are charged to expense as incurred. The
estimated useful lives of the Company’s property, plant and equipment follows:
Buildings
and improvements 20-30 years
Machinery
and equipment 3-15 years
Leasehold
improvements Shorter of the term of lease or estimated useful life Goodwill
and Indefinite-Lived Intangible Assets Goodwill (representing the excess of the amount paid to acquire
a company over the estimated fair value of the net assets acquired) and indefinite lived intangible assets are not amortized but
instead are tested for impairment annually, or when events or circumstances indicate that the carrying value of such asset may
not be recoverable. Separate tests are performed for goodwill and indefinite lived intangible assets. We completed a quantitative
test of impairment on the indefinite lived intangible assets with no impairment noted in the current year. The determination of
any goodwill impairment is made at the reporting unit level and consists of two steps. First, the Company determines the fair value
of a reporting unit and compares it to its carrying amount. Second, if the carrying amount of the reporting unit exceeds its fair
value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the goodwill’s
implied fair value. The Company applies the income approach (discounted cash flow method) in testing goodwill for impairment. The
key assumptions used in the discounted cash flow method used to estimate fair value include discount rates, revenue growth rates,
terminal growth rates and cash flow projections. Discount rates, revenue growth rates and cash flow projections are the most sensitive
and susceptible to change as they require significant management judgment. Discount rates are determined by using a weighted average
cost of capital (“WACC”). The WACC considers market and industry data as well as Company-specific risk factors for
each reporting unit in determining the appropriate discount rate to be used. The discount rate utilized for each reporting unit
for our fiscal 2020 test was 10.0% and is indicative of the return an investor would expect to receive for investing in such a
business. Terminal growth rate determination follows common methodology of capturing the present value of perpetual cash flow estimates
beyond the last projected period assuming a constant WACC and long-term growth rates. The terminal growth rate used for our fiscal
2020 test was 2.5%. The Company has determined that, to date, no impairment of goodwill exists and fair value of the reporting
units exceeded the carrying value in total by approximately 140.5%. The fair value of the reporting units exceeds the carrying
value by a minimum of 44.8% at each of the four reporting units. A decrease of 1.0% in our terminal growth rate would not result
in impairment of goodwill for any of our reporting units. An increase of 1.0% in our discount rate would not result in impairment
of goodwill for any of our reporting units. The Company performs the annual impairment testing during the fourth quarter of each
fiscal year. Although no changes are expected, if the actual results of the Company are less favorable than the assumptions the
Company makes regarding estimated cash flows, the Company may be required to record an impairment charge in the future. Deferred
Financing Costs Deferred
financing costs are amortized on a straight-line basis over the lives of the related credit agreements. Contract
Liabilities (Deferred Revenue) The
Company may receive a customer advance or deposit, or have an unconditional right to receive a customer advance, prior to revenue
being recognized. Since the performance obligations related to such advances may not have been satisfied, a contract liability
is established. Contract liabilities are included within accrued expenses and other current liabilities or other non-current liabilities
on the consolidated balance sheets until the respective revenue is recognized. Advance payments are not considered a significant
financing component as the timing of the transfer of the related goods or services is at the discretion of the customer. Pension
and Postretirement Health Care and Life Insurance Benefits The
Company has one consolidated noncontributory defined benefit pension plan covering union employees in its Heim division plant
in Fairfield, Connecticut, its Plymouth subsidiary plant in Plymouth, Indiana and former union employees of the Tyson
subsidiary in Glasgow, Kentucky and the Nice subsidiary in Kulpsville, Pennsylvania. The pension plan is overfunded as of
March 28, 2020 and is included within other assets on the consolidated balance sheets. The
Company, for the benefit of employees at its Heim, West Trenton, Plymouth and PIC facilities and former union employees of
its Tyson and Nice subsidiaries, sponsors contributory defined benefit health care plans that provide postretirement medical
and life insurance benefits to union employees who have attained certain age and/or service requirements while employed by
the Company. The plans are unfunded and costs are paid as incurred. Postretirement benefit obligations are included in
accrued expenses and other current liabilities and other non-current liabilities on the consolidated balance
sheets. We calculate our pension costs as required under U.S. GAAP,
and the calculations and assumptions utilized require judgment. U.S. GAAP outlines the methodology used to determine pension expense
or income for financial reporting purposes. Pension expense is split between operating income and non-operating income, where only
the service cost component is included in operating income (within cost of sales and other, net on the consolidated statements
of operations) and the non-service components are included in retirement benefits non-service expense (within other non-operating
expense on the consolidated statements of operations). For purposes of determining retirement benefits non-service expense under
U.S. GAAP, a calculated “market-related value” of our plan assets is used to develop the amount of deferred asset gains
or losses to be amortized. The market-related value of assets is determined using actual asset gains or losses over a three-year
period. Under U.S. GAAP, a “corridor” approach may be elected and applied in the recognition of asset and liability
gains or losses which limits expense recognition to the net outstanding gains and losses in excess of the greater of 10% of the
projected benefit obligation (PBO) or the calculated “market-related value” of assets. We do not use a “corridor”
approach in the calculation of pension expense. We
recognize the funded status of a postretirement benefit plan (defined benefit pension and other benefits) as an asset or liability
in our consolidated balance sheets. Funded status represents the difference between the PBO of the plan and the market value of
the plan’s assets. Previously unrecognized deferred amounts such as demographic or asset gains or losses and the impact
of historical plan changes are included in accumulated other comprehensive income/loss. Changes in these amounts in future years
will be reflected through accumulated other comprehensive income/loss and amortized in future pension expense generally over the
estimated average remaining employee service period. Income
Taxes The
Company accounts for income taxes using the liability method, which requires it to recognize a current tax liability or asset
for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary
differences between the financial statement and tax reporting bases of assets and liabilities to the extent that they are realizable.
Deferred tax expense (benefit) results from the net change in deferred tax assets and liabilities during the year. A valuation
allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company is
exposed to certain tax contingencies in the ordinary course of business and records those tax liabilities in accordance with the
guidance for accounting for uncertain tax positions. Temporary
differences relate primarily to the timing of deductions for depreciation, stock-based compensation, goodwill amortization relating
to the acquisition of operating divisions, basis differences arising from acquisition accounting, pension and retirement benefits,
and various accrued and prepaid expenses. Deferred tax assets and liabilities are recorded at the rates expected to be in effect
when the temporary differences are expected to reverse. Net
Income Per Common Share Basic
net income per common share is computed by dividing net income available to common stockholders by the weighted-average number
of common shares outstanding. Diluted
net income per common share is computed by dividing net income by the sum of the weighted-average number of common shares and
dilutive common share equivalents then outstanding using the treasury stock method. Common share equivalents consist of the incremental
common shares issuable upon the exercise of stock options. The
table below reflects the calculation of weighted-average shares outstanding for each year presented as well as the computation
of basic and diluted net income per common share:
Fiscal Year Ended
March 28, 2020 March 30, 2019 March 31, 2018
Net income $ 126,036 $ 105,193 $ 87,141
Denominator:
Denominator for basic net income per common share—weighted-average shares 24,632,637 24,357,684 23,948,565
Effect of dilution due to employee stock options 289,994 358,529 415,224
Denominator for diluted net income per common share—adjusted 24,922,631 24,716,213 24,363,789
Basic net income per common share $ 5.12 $ 4.32 $ 3.64
Diluted net income per common share $ 5.06 $ 4.26 $ 3.58 At
March 28, 2020, 350,540 employee stock options and 1,350 restricted shares have been excluded from the calculation of diluted
earnings per share. At March 30, 2019, 256,990 employee stock options and 1,500 restricted shares have been excluded from the
calculation of diluted earnings per share. At March 31, 2018, 217,280 employee stock options and 53,073 restricted shares have
been excluded from the calculation of diluted earnings per share. The inclusion of these employee stock options and restricted
shares would be anti-dilutive. Impairment
of Long-Lived Assets The
Company assesses the net realizable value of its long-lived assets and evaluates such assets for impairment whenever indicators
of impairment are present. For amortizable long-lived assets to be held and used, if indicators of impairment are present, management
determines whether the sum of the estimated undiscounted future cash flows is less than the carrying amount. The amount of asset
impairment, if any, is based on the excess of the carrying amount over its fair value, which is estimated based on projected discounted
future operating cash flows using a discount rate reflecting the Company’s average cost of funds. To date, no indicators of impairment
exist other than those resulting in the restructuring charges already recorded. Long-lived
assets to be disposed of by sale or other means are reported at the lower of carrying amount or fair value, less costs to sell. Foreign
Currency Translation and Transactions Assets
and liabilities of the Company’s foreign operations are translated into U.S. dollars using the exchange rate in effect at the
balance sheet date. Results of operations are translated using the average exchange rate prevailing throughout the period. The
effects of exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are included in
accumulated other comprehensive income (loss), while gains and losses resulting from foreign currency transactions are included
in other non-operating expense (income). Net income of the Company’s foreign operations for fiscal 2020, 2019 and 2018 amounted
to $3,526, $7,180 and $776, respectively. Total assets of the Company’s foreign operations were $159,039 and $115,789 at March
28, 2020 and March 30, 2019, respectively. Fair
Value of Measurements Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (exit price). Inputs used to measure fair value are within a hierarchy consisting of three
levels. Level 1 inputs represent unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 inputs
represent unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical
or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the
asset or liability. Level 3 inputs represent unobservable inputs for the asset or liability. Financial assets and liabilities
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The
carrying amounts reported in the balance sheet for cash and cash equivalents, short-term investments, accounts receivable, prepaids
and other current assets, and accounts payable and accruals, and other current liabilities approximate their fair value due to
their short-term nature. The
carrying amounts of the Company’s borrowings under the Revolver, Foreign Revolver and Foreign Term Loan approximate fair value,
as these obligations have interest rates which vary in conjunction with current market conditions. The carrying value of the mortgage
on our Schaublin building approximates fair value as the rates since entering into the mortgage in fiscal 2013 have not significantly
changed. All borrowings have been classified as Level 2 in the valuation hierarchy. Accumulated
Other Comprehensive Income (Loss) The
components of comprehensive income (loss) that relate to the Company are net income, foreign currency translation adjustments
and pension plan and postretirement benefits, all of which are presented in the consolidated statements of stockholders’ equity
and comprehensive income (loss). The
following summarizes the activity within each component of accumulated other comprehensive income (loss), net of taxes:
Currency Pension and Postretirement Total
Balance at March 30, 2019 $ (3,301 ) $ (4,166 ) $ (7,467 )
Impact from adoption of ASU 2018-02 — (1,289 ) (1,289 )
Other comprehensive income before reclassifications 2,719 — 2,719
Amounts reclassified from accumulated other comprehensive loss — (861 ) (861 )
Net current period other comprehensive income 2,719 (861 ) 1,858
Balance at March 28, 2020 $ (582 ) $ (6,316 ) $ (6,898 ) Share-Based
Compensation The
Company recognizes compensation cost relating to all share-based payment transactions in the financial statements based upon the
grant-date fair value of the instruments issued over the requisite service period. The fair value of each option grant was estimated
on the date of grant using the Black-Scholes pricing model. Recent
Accounting Pronouncements Recent
Accounting Standards Adopted In
February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases
(Topic 842) The
Company adopted this accounting standard on March 31, 2019 and has elected the modified retrospective transition method, which
permits the application of the new lease standard at the adoption date and recognition of a cumulative-effect adjustment to the
opening balance of retained earnings in the period of adoption. The Company has elected not to apply the recognition requirements
to short-term leases, and will recognize the lease payments in the income statement on a straight-line basis over the lease term
and variable payments in the period in which the obligation for those payments is incurred. The Company has elected the following
practical expedients (which must be elected as a package and applied consistently to all leases): an entity need not reassess
whether any expired or existing contracts are or contain leases; an entity need not reassess the lease classification for any
expired or existing leases; and an entity need not reassess initial direct costs for any existing leases. The Company has also
elected the practical expedient that permits the inclusion of lease and nonlease components as a single component and account
for it as a lease; this election has been made for all asset classes. We also elected the hindsight practical expedient to determine
the reasonably certain lease term for existing leases, which resulted in the extension of lease terms for certain existing leases. The cumulative-effect of the changes made to the balance sheet
on the first day of adoption resulted in the recognition of lease assets and lease liabilities for operating lease commitments
of $27,378. The adoption of this accounting standard had no impact on the Company’s consolidated statements of operations,
debt compliance or the captions on the consolidated statements of cash flows. The
Company determines if an arrangement is a lease at contract inception. For leases where the Company is the lessee, it recognizes
lease assets and related lease liabilities at the lease commencement date based on the present value of lease payments over the
lease term. The lease term is the noncancellable period for which a lessee has the right to use an underlying asset, including
periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option and periods covered
by an option to terminate the lease if the lessee is reasonably certain not to exercise that option. For renewal options, the
Company performs an assessment at commencement if it is reasonably likely to exercise the option. The assessment is based on the
Company’s intentions, past practices, estimates and factors that create an economic incentive for the Company. Generally, the
Company is not reasonably certain to exercise the renewal option in a lease contract, with the exception of some of our leased
manufacturing facilities. While some of the Company’s leases include options allowing early termination of the lease, the Company
historically has not terminated its lease agreements early unless there is an economic, financial or business reason to do so;
therefore, the Company does not typically consider the termination option in its lease term at commencement. Most
of the Company’s leases do not provide an implicit interest rate. As a result, the Company uses its incremental borrowing
rate based on the information available at the commencement date in determining the present value of lease payments. Lease
expense for operating leases is recognized on a straight-line basis over the lease term as an operat |
