Leases

9 Months Ended

Oct. 02, 2020

11. Leases

Most leases held by the Company expire between 2020 and 2034. In the U.K., where longer lease terms are more common, the Company has a land lease that extends through 2078. Certain leases include terms such as an option to purchase the property, one or more options to renew, with renewal terms that can extend the lease term from one to 10 years, and options to terminate the leases within one year. The exercise of lease renewal or termination options is at the Company’s sole discretion; therefore, the majority of renewals to extend the lease terms are not included in the Company’s right-of-use assets and operating lease liabilities as they are not reasonably certain of being exercised. The Company regularly evaluates the renewal options and includes the renewal periods in the lease term when they are reasonably certain of being exercised. The depreciable lives of the right-of-use assets and leasehold improvements are limited to the expected lease terms.

The following table summarizes the components of lease costs (in thousands):

	Three Months Ended				Nine Months Ended
	October 2,		September 27,		October 2,		September 27,
	2020		2019		2020		2019
Operating lease cost	$	1,786	$	1,830	$	5,693	$	5,695
Finance lease cost
Amortization of right-of-use assets		253		228		748		583
Interest on lease liabilities		108		110		326		316
Variable lease cost		320		505		1,043		1,051
Total lease cost	$	2,467	$	2,673	$	7,810	$	7,645

The following table provides additional details of balance sheet information related to the Company’s leases (in thousands, except lease term and discount rate):

	October 2,			December 31,
	2020			2019
Operating leases
Operating lease right-of-use assets	$	33,841		$	35,180

Current portion of operating lease liabilities	$	5,553		$	5,043
Operating lease liabilities		32,499			34,108
Total operating lease liabilities	$	38,052		$	39,151

Finance leases
Property, plant and equipment, gross	$	20,242		$	19,748
Accumulated depreciation		(5,528	)		(4,649	)
Finance lease assets included in property, plant and equipment, net	$	14,714		$	15,099

Accrued expenses and other current liabilities	$	9,503		$	1,307
Other liabilities		6,052			14,845
Total finance lease liabilities	$	15,555		$	16,152

Weighted-average remaining lease term (in years)
Operating leases		9.6			10.2
Finance leases		3.8			4.7
Weighted-average discount rate
Operating leases		5.56	%		5.60	%
Finance leases		3.02	%		3.09	%

The following table provides additional details of cash flow information related to the Company’s leases (in thousands):

	Nine Months Ended
	October 2,		September 27,
	2020		2019
Cash paid for amounts included in lease liabilities:
Operating cash flows from finance leases	$	357	$	404
Operating cash flows from operating leases	$	5,088	$	5,124
Financing cash flows from finance leases	$	1,034	$	547
Supplemental non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	3,050	$	5,649

Future minimum lease payments under operating and finance leases expiring subsequent to October 2, 2020, including operating leases associated with facilities that have been vacated as a result of the Company’s restructuring actions, are summarized as follows (in thousands):

Year Ending December 31,	Operating Leases			Finance Leases ⁽¹⁾
2020 (remainder of year)	$	1,159		$	357
2021		7,183			9,660
2022		6,233			907
2023		5,184			930
2024		4,575			954
Thereafter		25,706			4,440
Total minimum lease payments		50,040			17,248
Less: Interest		(11,988	)		(1,693	)
Present value of lease liabilities	$	38,052		$	15,555

⁽¹⁾

Future minimum lease payments under finance leases include the exercise price of an option to purchase a facility in Germany in 2021.