LEASES

9 Months Ended

Jul. 02, 2022

8. LEASES

We have entered into various non-cancellable operating and finance lease agreements for certain of our offices, manufacturing, technology, sales support and service centers, equipment, and vehicles. We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. Our lease terms may include one or more options to extend the lease terms, for periods from one year to 20 years, when it is reasonably certain that we will exercise that option. As of July 2, 2022, there was no option to extend the lease which was recognized as a right-of-use ("ROU") asset, or a lease liability. We have lease agreements with lease and non-lease components, and non-lease components are accounted for separately and not included in our leased assets and corresponding liabilities. We have elected not to present short-term leases on the Consolidated Condensed Balance Sheets as these leases have a lease term of 12 months or less at lease inception.

Operating leases are included in operating ROU assets, current operating lease liabilities and non-current operating lease liabilities, and finance leases are included in property, plant and equipment, accrued expenses and other current liabilities, and other liabilities on the Consolidated Condensed Balance Sheets. As of July 2, 2022 and October 2, 2021, our finance leases are not material.

The following table shows the components of lease expense:


	Three months ended				Nine months ended
(in thousands)	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
Operating lease expense (1)	$	2,173	$	1,894	$	6,217	$	5,693

(1)Operating lease expense includes short-term lease expense, which is immaterial for the three and nine months ended July 2, 2022 and July 3, 2021.

The following table shows the cash flows arising from lease transactions. Cash payments related to short-term leases are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below:


	Nine months ended
(in thousands)	July 2, 2022		July 3, 2021
Cash paid for amounts included in the measurement of lease liabilities:


Operating cash outflows from operating leases	$	5,715	$	5,364

The following table shows the weighted-average lease terms and discount rates for operating leases:


	As of
	July 2, 2022		October 2, 2021
Operating leases:
Weighted-average remaining lease term (in years):	8.5		9.6


Weighted-average discount rate:	5.7	%	5.8	%

Future lease payments, excluding short-term leases are detailed as follows:


	As of
(in thousands)	July 2, 2022
Remaining fiscal 2022	$	2,095
Fiscal 2023	8,133
Fiscal 2024	7,680
Fiscal 2025	6,935
Fiscal 2026	5,006
Thereafter	24,028
Total minimum lease payments	$	53,877
Less: Interest	$	12,068
Present value of lease obligations	$	41,809
Less: Current portion	$	5,973
Long-term portion of lease obligations	$	35,836