Leases

9 Months Ended

Sep. 30, 2022

11. Leases

Most leases held by the Company expire between 2022 and 2036. In the U.K., where longer lease terms are more common, the Company has a land lease that extends through 2078. Certain leases include 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 renewal options 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
	September 30,		October 1,		September 30,		October 1,
	2022		2021		2022		2021
Operating lease cost	$	2,544	$	2,418	$	7,936	$	6,213
Finance lease cost
Amortization of right-of-use assets		150		149		451		451
Interest on lease liabilities		77		85		234		257
Variable lease cost		271		275		888		834
Total lease cost	$	3,042	$	2,927	$	9,509	$	7,755

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


	September 30,			December 31,
	2022			2021
Operating leases
Operating lease right-of-use assets	$	43,520		$	48,338

Current portion of operating lease liabilities	$	7,663		$	7,334
Operating lease liabilities		40,907			45,700
Total operating lease liabilities	$	48,570		$	53,034

Finance leases
Property, plant and equipment, gross	$	9,582		$	9,582
Accumulated depreciation		(5,520	)		(5,068	)
Finance lease assets included in property, plant and equipment, net	$	4,062		$	4,514

Accrued expenses and other current liabilities	$	651		$	599
Other liabilities		4,825			5,309
Total finance lease liabilities	$	5,476		$	5,908

Weighted-average remaining lease term (in years):
Operating leases		8.2			9.0
Finance leases		6.8			7.5
Weighted-average discount rate:
Operating leases		4.67	%		4.72	%
Finance leases		5.54	%		5.54	%

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


	Nine Months Ended
	September 30,		October 1,
	2022		2021
Cash paid for amounts included in lease liabilities:
Operating cash flows from finance leases	$	234	$	257
Operating cash flows from operating leases	$	5,921	$	5,562
Financing cash flows from finance leases	$	447	$	9,166
Supplemental non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	4,621	$	15,340

During the nine months ended October 1, 2021, the Company paid $8.7 million upon the exercise of an option to purchase a building under a finance lease agreement in Germany. The cash payment is presented as a cash outflow from financing activities in the consolidated statement of cash flows.

Future minimum lease payments under operating and finance leases expiring subsequent to September 30, 2022, 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
2022 (remainder of year)	$	2,434		$	243
2023		9,030			930
2024		8,376			954
2025		8,013			954
2026		6,940			979
Thereafter		25,347			2,506
Total minimum lease payments		60,140			6,566
Less: Interest		(11,570	)		(1,090	)
Present value of lease liabilities	$	48,570		$	5,476