Lessee ROU Assets and Lease Liabilities

6 Months Ended

Jul. 03, 2021

Lessee, ROU Assets and Lease Liabilities

11. Lessee ROU Assets and Lease Liabilities

The Company leases certain facilities in North and South America, Europe, the Middle East and Asia-Pacific regions under operating lease agreements expiring at various dates through January 2032. In addition, the Company leases equipment in the U.S. and Europe, and these leases are classified as operating leases and expire at various dates through May 2026. The majority of these leases are non-cancellable and generally do not contain any material restrictive covenants, material residual value guarantees or other material guarantees. The Company recognizes lease costs under these agreements using a straight-line method based on total lease payments. Certain facility leases contain predetermined price escalations and in some cases renewal options, the longest of which is for five years.

The Company generally estimates the applicable discount rate used to determine the net present value of lease payments based on available information at the lease commencement date. As of July 3, 2021, the weighted-average discount rate used by the Company for all operating leases was approximately 2.5%.

The balance sheet classifications for amounts related to the Company’s operating leases for which it is the lessee are as follows (in thousands):


	Balance sheet classification	July 3, 2021		January 2, 2021
Lessee ROU assets	Other non-current assets	$	33,031	$	32,324

Lessee current lease liabilities	Other current liabilities	6,248		5,975
Lessee non-current lease liabilities	Other non-current liabilities	28,940		28,373
Total operating lease liabilities		$	35,188	$	34,348

As of July 3, 2021 and January 2, 2021, accumulated amortization for lessee ROU assets was $12.0 million and $9.2 million, respectively. The weighted-average remaining lease term for the Company’s operating leases was 6.9 years as of July 3, 2021.

As of July 3, 2021, estimated future operating lease payments for each of the following fiscal years were as follows (in thousands):


Fiscal year	Amount
2021 (balance of year)	$	3,693
2022	6,719
2023	6,522
2024	5,120
2025	4,007
Thereafter(1)	12,387
Total	38,448
Imputed interest	(3,260)
Present value	$	35,188

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(1) Includes optional renewal period for certain leases.

During the three months ended July 3, 2021 and June 27, 2020, operating lease costs were approximately $2.2 million and $1.7 million, respectively. During the six months ended July 3, 2021 and June 27, 2020, operating lease costs were approximately $4.1 million and $3.4 million, respectively.