Lessee ROU Assets and Lease Liabilities

9 Months Ended

Sep. 28, 2024

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 pursuant to leases that are classified as operating leases and expire at various dates through November 2028. 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 September 28, 2024, the weighted-average discount rate used by the Company for all operating leases was approximately 4.6%.

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


(in millions)	Balance sheet classification	September 28, 2024		December 30, 2023
Lessee ROU assets	Other non-current assets	$	83.1	$	59.1

Lessee current lease liabilities	Other current liabilities	22.5		18.2
Lessee non-current lease liabilities	Other non-current liabilities	65.8		45.8
Total operating lease liabilities		$	88.3	$	64.0

As of September 28, 2024 and December 30, 2023, accumulated amortization for lessee ROU assets was $55.5 million and $48.9 million, respectively. The weighted-average remaining lease term for the Company’s operating leases was 5.2 years as of September 28, 2024.

As of September 28, 2024, estimated future operating lease payments for each of the following fiscal years were as follows:


Fiscal year	Amount (in millions)
2024 (balance of year)	$	6.1
2025	25.1
2026	20.1
2027	15.0
2028	13.1
Thereafter(1)	20.9
Total	100.3
Imputed interest	(12.0)
Present value	$	88.3

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(1) Includes optional renewal period for certain leases.

During the three months ended September 28, 2024 and September 30, 2023, operating lease costs were approximately $5.6 million and $12.6 million, respectively. During the nine months ended September 28, 2024 and September 30, 2023, operating lease costs were approximately $17.5 million and $33.2 million, respectively.

As part of the Company’s on-going rationalization of its operational footprint of the non-healthcare business, one operating lease was identified as under-utilized and considered temporarily idled due to the inability to sublease the property timely while having three years remaining on the lease term. The Company recorded an adjustment of approximately $3.9 million to reduce the ROU asset during the three months ended March 30, 2024, which was recorded in selling, general, and administrative expenses in the condensed consolidated statement of operations.