Quarterly Report (10-q)

Date : 08/05/2019 @ 7:31PM
Source : Edgar (US Regulatory)
Stock : BJs Restaurants Inc (BJRI)
Quote : 40.62  0.0 (0.00%) @ 12:00AM

Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q  

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

   For the Quarterly Period Ended July 2, 2019

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to ______  

Commission file number 0-21423

BJ’S RESTAURANTS, INC .

(Exact name of registrant as specified in its charter)  

 

California

33‑0485615

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

7755 Center Avenue, Suite 300

Huntington Beach, California 92647

(714) 500-2400

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading

Symbol

 

Name of each exchange on which registered

Common Stock, No Par Value

 

BJRI

 

NASDAQ Global Select Market

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes No

 

Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes     No     

 

As of August 2, 2019, there were 20,461,220 shares of Common Stock of the Registrant outstanding.  


BJ’S RESTAURANTS, INC.

TABLE OF CONTENTS

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

 

Consolidated Financial Statements

 

 

 

 

 

 

 

Consolidated Balance Sheets –
   July 2, 2019 (Unaudited) and January 1, 2019

1

 

 

 

 

 

 

Unaudited Consolidated Statements of Income –
   Thirteen and Twenty-Six Weeks Ended July 2, 2019 and July 3, 2018

2

 

 

 

Unaudited Consolidated Statements of Shareholders’ Equity –
   Thirteen and Twenty-Six Weeks Ended July 2, 2019 and July 3, 2018

3

 

 

 

Unaudited Consolidated Statements of Cash Flows –
   Thirteen and Twenty-Six Weeks Ended July 2, 2019 and July 3, 2018

4

 

 

 

 

 

 

Notes to Unaudited Consolidated Financial Statements

5

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

13

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

23

 

 

 

 

Item 4.

 

Controls and Procedures

23

 

 

 

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

Item 1.

 

Legal Proceedings

24

 

 

 

 

Item 1A.

 

Risk Factors

24

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

24

 

 

 

 

Item 6.

 

Exhibits

25

 

 

 

 

 

 

 

 

 

 

SIGNATURES

26

 

 

 


 

 

PART I. FINANCIAL INFORMATION

 

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

 

BJ’S RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

July 2, 2019

 

 

January 1, 2019

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

23,376

 

 

$

29,224

 

Accounts and other receivables, net

 

 

17,714

 

 

 

31,190

 

Inventories, net

 

 

10,589

 

 

 

10,133

 

Prepaid expenses and other current assets

 

 

5,947

 

 

 

7,940

 

Total current assets

 

 

57,626

 

 

 

78,487

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

581,605

 

 

 

582,754

 

Operating lease assets

 

 

377,352

 

 

 

 

Goodwill

 

 

4,673

 

 

 

4,673

 

Other assets, net

 

 

34,264

 

 

 

29,193

 

Total assets

 

$

1,055,520

 

 

$

695,107

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable (1)

 

$

33,114

 

 

$

36,505

 

Accrued expenses

 

 

96,757

 

 

 

113,920

 

Current operating lease obligations

 

 

26,368

 

 

 

 

Total current liabilities

 

 

156,239

 

 

 

150,425

 

 

 

 

 

 

 

 

 

 

Long-term operating lease obligations

 

 

443,117

 

 

 

 

Deferred income taxes

 

 

20,869

 

 

 

15,977

 

Deferred rent

 

 

 

 

 

35,088

 

Deferred lease incentives

 

 

 

 

 

54,264

 

Long-term debt

 

 

100,000

 

 

 

95,000

 

Other liabilities

 

 

11,059

 

 

 

35,132

 

Total liabilities

 

 

731,284

 

 

 

385,886

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, 5,000 shares authorized, none issued or outstanding

 

 

 

 

 

 

Common stock, no par value, 125,000 shares authorized and 20,510

   and 21,058 shares issued and outstanding as of July 2, 2019 and

   January 1, 2019, respectively

 

 

 

 

 

 

Capital surplus

 

 

63,430

 

 

 

64,342

 

Retained earnings

 

 

260,806

 

 

 

244,879

 

Total shareholders’ equity

 

 

324,236

 

 

 

309,221

 

Total liabilities and shareholders’ equity

 

$

1,055,520

 

 

$

695,107

 

 

See accompanying notes to unaudited consolidated financial statements.

 

 

(1)

Included in accounts payable as of July 2, 2019 and January 1, 2019 is $6,458 and $6,110, respectively, of related party trade payables. See Note 6 for further information.

1

 


 

BJ’S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 

 

 

For the Thirteen Weeks Ended

 

 

For the Twenty-Six Weeks Ended

 

 

 

July 2, 2019

 

 

July 3, 2018

 

 

July 2, 2019

 

 

July 3, 2018

 

Revenues

 

$

301,090

 

 

$

287,634

 

 

$

591,644

 

 

$

566,157

 

Restaurant operating costs (excluding depreciation and amortization):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (1)

 

 

76,861

 

 

 

72,026

 

 

 

150,187

 

 

 

141,997

 

Labor and benefits

 

 

108,505

 

 

 

101,986

 

 

 

213,726

 

 

 

202,419

 

Occupancy and operating (1)

 

 

64,493

 

 

 

59,073

 

 

 

126,084

 

 

 

116,576

 

General and administrative

 

 

15,985

 

 

 

15,851

 

 

 

32,881

 

 

 

30,982

 

Depreciation and amortization

 

 

17,839

 

 

 

17,620

 

 

 

35,481

 

 

 

35,074

 

Restaurant opening

 

 

610

 

 

 

835

 

 

 

1,058

 

 

 

1,432

 

Loss on disposal of assets

 

 

1,042

 

 

 

1,123

 

 

 

2,687

 

 

 

2,184

 

Total costs and expenses

 

 

285,335

 

 

 

268,514

 

 

 

562,104

 

 

 

530,664

 

Income from operations

 

 

15,755

 

 

 

19,120

 

 

 

29,540

 

 

 

35,493

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(1,066

)

 

 

(1,381

)

 

 

(2,136

)

 

 

(2,768

)

Other income (expense), net

 

 

141

 

 

 

81

 

 

 

1,238

 

 

 

(19

)

Total other expense

 

 

(925

)

 

 

(1,300

)

 

 

(898

)

 

 

(2,787

)

Income before income taxes

 

 

14,830

 

 

 

17,820

 

 

 

28,642

 

 

 

32,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

638

 

 

 

875

 

 

 

1,586

 

 

 

1,097

 

Net income

 

$

14,192

 

 

$

16,945

 

 

$

27,056

 

 

$

31,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.69

 

 

$

0.81

 

 

$

1.30

 

 

$

1.52

 

Diluted

 

$

0.68

 

 

$

0.79

 

 

$

1.27

 

 

$

1.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

20,692

 

 

 

20,880

 

 

 

20,874

 

 

 

20,733

 

Diluted

 

 

20,999

 

 

 

21,477

 

 

 

21,232

 

 

 

21,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.12

 

 

$

0.11

 

 

$

0.24

 

 

$

0.22

 

 

See accompanying notes to unaudited consolidated financial statements.

 

(1)

Related party costs included in cost of sales are $22,430 and $22,279 for the thirteen weeks ended July 2, 2019 and July 3, 2018, respectively and $44,192 and $43,581 for the twenty-six weeks ended July 2, 2019 and July 3, 2018, respectively. Related party costs included in occupancy and operating are $2,391 and $2,472 for the thirteen weeks ended July 2, 2019 and July 3, 2018, respectively and $4,818 and $4,934 for the twenty-six weeks ended July 2, 2019 and July 3, 2018. See Note 6 for further information.

 


2

 


 

BJ’S RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

 

 

 

For the Thirteen Weeks Ended

 

 

 

Common Stock

 

 

Capital

 

 

Retained

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Surplus

 

 

Earnings

 

 

Total

 

Balance, April 3, 2018

 

 

20,669

 

 

$

 

 

$

67,088

 

 

$

201,699

 

 

$

268,787

 

Exercise of stock options

 

 

335

 

 

 

13,786

 

 

 

(2,843

)

 

 

 

 

 

10,943

 

Issuance of restricted stock units

 

 

15

 

 

 

491

 

 

 

(491

)

 

 

 

 

 

 

Repurchase and retirement of common stock

 

 

(23

)

 

 

(14,277

)

 

 

 

 

 

13,152

 

 

 

(1,125

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,867

 

 

 

 

 

 

1,867

 

Dividends paid or payable, $0.11 per share

 

 

 

 

 

 

 

 

 

 

 

(2,369

)

 

 

(2,369

)

Net income

 

 

 

 

 

 

 

 

 

 

 

16,945

 

 

 

16,945

 

Balance, July 3, 2018

 

 

20,996

 

 

$

 

 

$

65,621

 

 

$

229,427

 

 

$

295,048

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, April 2, 2019

 

 

20,909

 

 

$

 

 

$

61,683

 

 

$

267,585

 

 

$

329,268

 

Exercise of stock options

 

 

5

 

 

 

261

 

 

 

(64

)

 

 

 

 

 

197

 

Issuance of restricted stock units

 

 

18

 

 

 

562

 

 

 

(560

)

 

 

 

 

 

2

 

Repurchase and retirement of common stock

 

 

(422

)

 

 

(823

)

 

 

 

 

 

(18,424

)

 

 

(19,247

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,371

 

 

 

 

 

 

2,371

 

Dividends paid or payable, $0.12 per share

 

 

 

 

 

 

 

 

 

 

 

(2,547

)

 

 

(2,547

)

Net income

 

 

 

 

 

 

 

 

 

 

 

14,192

 

 

 

14,192

 

Balance, July 2, 2019

 

 

20,510

 

 

$

 

 

$

63,430

 

 

$

260,806

 

 

$

324,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twenty-Six Weeks Ended

 

 

 

Common Stock

 

 

Capital

 

 

Retained

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Surplus

 

 

Earnings

 

 

Total

 

Balance, January 2, 2018

 

 

20,485

 

 

$

 

 

$

68,904

 

 

$

189,825

 

 

$

258,729

 

Exercise of stock options

 

 

618

 

 

 

23,229

 

 

 

(6,386

)

 

 

 

 

 

16,843

 

Issuance of restricted stock units

 

 

51

 

 

 

775

 

 

 

(1,140

)

 

 

 

 

 

(365

)

Repurchase and retirement of common stock

 

 

(158

)

 

 

(24,004

)

 

 

 

 

 

17,313

 

 

 

(6,691

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,243

 

 

 

 

 

 

4,243

 

Cumulative effect of adopting revenue recognition standard

 

 

 

 

 

 

 

 

 

 

 

(4,598

)

 

 

(4,598

)

Dividends paid or payable, $0.22 per share

 

 

 

 

 

 

 

 

 

 

 

(4,722

)

 

 

(4,722

)

Net income

 

 

 

 

 

 

 

 

 

 

 

31,609

 

 

 

31,609

 

Balance, July 3, 2018

 

 

20,996

 

 

$

 

 

$

65,621

 

 

$

229,427

 

 

$

295,048

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2019

 

 

21,058

 

 

$

 

 

$

64,342

 

 

$

244,879

 

 

$

309,221

 

Exercise of stock options

 

 

21

 

 

 

944

 

 

 

(233

)

 

 

 

 

 

711

 

Issuance of restricted stock units

 

 

102

 

 

 

4,211

 

 

 

(5,212

)

 

 

 

 

 

(1,001

)

Repurchase and retirement of common stock

 

 

(671

)

 

 

(5,155

)

 

 

 

 

 

(25,986

)

 

 

(31,141

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,533

 

 

 

 

 

 

4,533

 

Cumulative effect of adopting lease standard

 

 

 

 

 

 

 

 

 

 

 

19,963

 

 

 

19,963

 

Dividends paid or payable, $0.24 per share

 

 

 

 

 

 

 

 

 

 

 

(5,106

)

 

 

(5,106

)

Net income

 

 

 

 

 

 

 

 

 

 

 

27,056

 

 

 

27,056

 

Balance, July 2, 2019

 

 

20,510

 

 

$

 

 

$

63,430

 

 

$

260,806

 

 

$

324,236

 

 

See accompanying notes to unaudited consolidated financial statements.

 

3

 


 

BJ’S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

For the Twenty-Six Weeks Ended

 

 

 

July 2, 2019

 

 

July 3, 2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

27,056

 

 

$

31,609

 

Adjustments to reconcile net income to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

35,481

 

 

 

35,074

 

Non-cash lease expense

 

 

13,576

 

 

 

 

Deferred income taxes

 

 

(1,607

)

 

 

(3,153

)

Stock-based compensation expense

 

 

4,379

 

 

 

4,081

 

Loss on disposal of assets

 

 

2,687

 

 

 

2,184

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts and other receivables

 

 

15,401

 

 

 

829

 

Landlord contribution for tenant improvements

 

 

 

 

 

(3,257

)

Inventories, net

 

 

(456

)

 

 

367

 

Prepaid expenses and other current assets

 

 

1,805

 

 

 

1,434

 

Other assets, net

 

 

(5,873

)

 

 

(1,272

)

Accounts payable

 

 

(509

)

 

 

(6,983

)

Accrued expenses

 

 

(10,352

)

 

 

8,208

 

Operating lease obligations

 

 

(20,179

)

 

 

 

Deferred rent

 

 

 

 

 

1,279

 

Deferred lease incentives

 

 

 

 

 

2,329

 

Other liabilities

 

 

2,978

 

 

 

(636

)

Net cash provided by operating activities

 

 

64,387

 

 

 

72,093

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(38,757

)

 

 

(28,752

)

Net cash used in investing activities

 

 

(38,757

)

 

 

(28,752

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings on line of credit

 

 

516,500

 

 

 

670,500

 

Payments on line of credit

 

 

(511,500

)

 

 

(724,000

)

Taxes paid on vested stock units under employee plans

 

 

(1,002

)

 

 

(365

)

Proceeds from exercise of stock options

 

 

711

 

 

 

16,843

 

Cash dividends paid

 

 

(5,046

)

 

 

(4,600

)

Repurchases of common stock

 

 

(31,141

)

 

 

(6,691

)

Net cash used in financing activities

 

 

(31,478

)

 

 

(48,313

)

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(5,848

)

 

 

(4,972

)

Cash and cash equivalents, beginning of period

 

 

29,224

 

 

 

24,335

 

Cash and cash equivalents, end of period

 

$

23,376

 

 

$

19,363

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

4,067

 

 

$

6,726

 

Cash paid for interest, net of capitalized interest

 

$

1,880

 

 

$

2,464

 

Cash paid for operating lease obligations

 

$

33,559

 

 

$

 

Supplemental disclosure of non-cash operating, investing and financing activities:

 

 

 

 

 

Operating lease assets obtained in exchange for operating lease obligations

 

$

13,893

 

 

$

 

Property and equipment acquired and included in accounts payable

 

$

7,478

 

 

$

3,871

 

Stock-based compensation capitalized

 

$

154

 

 

$

162

 

 

See accompanying notes to unaudited consolidated financial statements.

4

 


 

BJ’S RESTAURANTS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

 

1.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of BJ’s Restaurants, Inc. (referred to herein as the “Company,” “we,” “us” and “our”) and our wholly owned subsidiaries. The consolidated financial statements presented herein include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of our financial condition, results of operations, changes in shareholders’ equity and cash flows for the period. Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in consolidated financial statements in accordance with U.S. GAAP have been omitted pursuant to the U.S. Securities and Exchange Commission (“SEC”) rules.

The preparation of financial statements in conformity with U.S. GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual amounts could differ from these estimates.

A description of our accounting policies and other financial information is included in our audited consolidated financial statements filed with the SEC on Form 10-K for the year ended January 1, 2019. The disclosures included in our accompanying interim consolidated financial statements and footnotes should be read in conjunction with our consolidated financial statements and notes thereto included in the Annual Report on Form 10-K and our other reports filed from time to time with the Securities and Exchange Commission.  

 

Recently Issued Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40). This update clarifies the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 will be effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We will adopt ASU 2018-15 during the first quarter of fiscal 2020. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

 

Recently Adopted Accounting Standards

On January 2, 2019, the first day of fiscal 2019, we adopted ASU 2016-02, Leases (Topic 842), along with related clarifications and improvements. This pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use asset on the balance sheet. The guidance requires disclosure of key information about leasing arrangements that is intended to give financial statement users the ability to assess the amount, timing, and potential uncertainty of cash flows related to leases. We elected the optional transition method to apply the standard as of the effective date and therefore, we have not applied the standard to the comparative periods presented on our consolidated financial statements.

Our practical expedient implications as of January 2, 2019 were as follows:

   

 

 

Practical expedient package

 

We have not reassessed whether any expired or existing contracts are, or contain, leases.



 

We have not reassessed the lease classification for any expired or existing leases.



 

We have not reassessed initial direct costs for any expired or existing leases.

Hindsight practical expedient

 

We have not elected the hindsight practical expedient, which permits the use of hindsight when determining lease term, including option periods, and impairment of operating lease assets. 

Related to the adoption of Topic 842, our policy elections were as follows:

   

 

 

Separation of lease and non-lease components

 

We elected to account for lease and non-lease components as a single component for office and beverage gas equipment .

5

 


 

Short-term policy

 

We have elected the short-term lease recognition exemption for all classes of underlying assets. E xpense for short-term leases is recognized on a straight-line basis over the lease term. L eases with an initial term of 12 months or less and that do not include an option to purchase the underlying asset that we are reasonably certain to exercise are not recorded on the balance sheet.

 

The impact on our consolidated opening balance sheet was as follows:

 

 

 

January 1, 2019

 

 

Topic 842 Adjustments

 

 

January 2, 2019

 

 

 

 

 

 

 

(1)

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Current assets: