Leases

3 Months Ended

Apr. 03, 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
	April 3,		March 29,
	2020		2019
Operating lease cost	$	2,037	$	1,823
Finance lease cost
Amortization of right-of-use assets		248		178
Interest on lease liabilities		110		105
Variable lease cost		379		138
Total lease cost	$	2,774	$	2,244

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

	April 3,			December 31,
	2020			2019
Operating leases
Operating lease right-of-use assets	$	34,332		$	35,180

Current portion of operating lease liabilities	$	4,646		$	5,043
Operating lease liabilities		33,036			34,108
Total operating lease liabilities	$	37,682		$	39,151

Finance leases
Property, plant and equipment, gross	$	19,455		$	19,748
Accumulated depreciation		(4,914	)		(4,649	)
Finance lease assets included in property, plant and equipment, net	$	14,541		$	15,099

Accrued expenses and other current liabilities	$	9,130		$	1,307
Other liabilities		6,334			14,845
Total finance lease liabilities	$	15,464		$	16,152

Weighted-average remaining lease term (in years)
Operating leases		10.0			10.2
Finance leases		4.5			4.7
Weighted-average discount rate
Operating leases		5.51	%		5.60	%
Finance leases		3.05	%		3.09	%

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

	Three Months Ended
	April 3,		March 29,
	2020		2019
Cash paid for amounts included in lease liabilities
Operating cash flows from finance leases	$	110	$	105
Operating cash flows from operating leases	$	2,258	$	1,944
Financing cash flows from finance leases	$	369	$	140
Supplemental non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,331	$	839

Future minimum lease payments under operating and finance leases expiring subsequent to April 3, 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 Lease			Finance Lease ⁽¹⁾
2020 (remainder of year)	$	3,971		$	1,205
2021		6,806			9,012
2022		5,716			907
2023		4,848			930
2024		4,318			954
Thereafter		25,523			4,440
Total minimum lease payments		51,182			17,448
Less: Interest		(13,500	)		(1,984	)
Present value of lease liabilities	$	37,682		$	15,464

(1)

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