Lease Receivable

6 Months Ended

Jul. 02, 2022

6. Lease Receivable

Effective January 2, 2022, the Company adopted ASU 2021-05 prospectively for leases that commenced or were modified on or after the date of adoption, resulting in the Company recording these operating lease assets within property, plant, and equipment, net of accumulated depreciation. The equipment costs associated with such new operating leases were initially deferred and will subsequently be amortized over the lease term on a straight-line basis.

The Company recognizes revenue and costs, as well as a lease receivable, at the time the lease commences pursuant to deferred equipment agreements containing embedded sales-type leases. Lease revenue related to both operating-type and sales-type leases for the three months ended July 2, 2022 and July 3, 2021 was approximately $11.0 million and $18.0 million, respectively, and is included within product revenue in the accompanying condensed consolidated statements of operations. Lease revenue related to both operating-type and sales-type leases for the six months ended July 2, 2022 and July 3, 2021 was approximately $24.0 million and $28.0 million, respectively, and is included within revenue in the accompanying condensed consolidated statements of operations. Costs related to embedded leases within the Company’s deferred equipment agreements are included in cost of goods sold in the accompanying condensed consolidated statements of operations.

Lease receivable from sales-type leases consists of the following:


(in millions)	July 2, 2022		January 1, 2022
Lease receivable	$	104.6	$	102.6
Allowance for credit loss	(0.3)		(0.3)
Lease receivable, net	104.3		102.3
Less: current portion of lease receivable	(28.9)		(28.7)
Lease receivable, noncurrent	$	75.4	$	73.6

As of July 2, 2022, estimated future maturities of customer sales-type lease receivables and operating lease payments for each of the following fiscal years are as follows:


	Future Lease Receivables/Payments (in millions)
Fiscal year	Sales-Type Leases		Operating Leases
2022 (balance of year)	$	15.0	$	1.1
2023	26.9		1.6
2024	23.2		1.6
2025	17.8		1.5
2026	11.1		1.3
Thereafter	10.3		3.0
Total	$	104.3	$	10.1
Less: imputed interest(1)	—
Present value of total lease payments	$	104.3

______________

(1) The calculation of the rates implicit in the leases resulted in negative discount rates. Therefore, the Company as a lessor used a 0% discount rate to measure the net investment in the lease.