LEASES

3 Months Ended

Dec. 31, 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 December 31, 2022, there were four options 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 December 31, 2022 and October 1, 2022, our finance leases are not material.

The following table shows the components of lease expense:


	Three months ended
(in thousands)	December 31, 2022		January 1, 2022
Operating lease expense (1)	$	2,590	$	2,054

(1)Operating lease expense includes short-term lease expense, which is immaterial for the three months ended December 31, 2022 and January 1, 2022.

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:


	Three months ended
(in thousands)	December 31, 2022		January 1, 2022
Cash paid for amounts included in the measurement of lease liabilities:


Operating cash outflows from operating leases	$	2,284	$	1,885

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


	As of
	December 31, 2022		October 1, 2022
Operating leases:
Weighted-average remaining lease term (in years):	8.0		8.0


Weighted-average discount rate:	5.9	%	5.8	%

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


	As of
(in thousands)	December 31, 2022
Remaining fiscal 2023	$	7,194
Fiscal 2024	8,906
Fiscal 2025	8,116
Fiscal 2026	7,152
Fiscal 2027	5,371
Thereafter	23,311
Total minimum lease payments	$	60,050
Less: Interest	$	12,884
Present value of lease obligations	$	47,166
Less: Current portion	$	6,841
Long-term portion of lease obligations	$	40,325