Leases

6 Months Ended

Jul. 02, 2021

10. Leases

Most leases held by the Company expire between 2021 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 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				Six Months Ended
	July 2,		July 3,		July 2,		July 3,
	2021		2020		2021		2020
Operating lease cost	$	1,964	$	1,870	$	3,795	$	3,907
Finance lease cost
Amortization of right-of-use assets		151		247		302		495
Interest on lease liabilities		86		108		173		218
Variable lease cost		324		344		559		723
Total lease cost	$	2,525	$	2,569	$	4,829	$	5,343

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

	July 2,			December 31,
	2021			2020
Operating leases
Operating lease right-of-use assets	$	33,407		$	34,444

Current portion of operating lease liabilities	$	6,430		$	6,188
Operating lease liabilities		32,248			32,802
Total operating lease liabilities	$	38,678		$	38,990

Finance leases
Property, plant and equipment, gross	$	9,582		$	19,819
Accumulated depreciation		(4,767	)		(4,934	)
Finance lease assets included in property, plant and equipment, net	$	4,815		$	14,885

Accrued expenses and other current liabilities	$	582		$	9,720
Other liabilities		5,611			5,908
Total finance lease liabilities	$	6,193		$	15,628

Weighted-average remaining lease term (in years)
Operating leases		9.2			9.3
Finance leases		8.0			3.5
Weighted-average discount rate
Operating leases		5.39	%		5.50	%
Finance leases		5.54	%		3.00	%

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

	Six Months Ended
	July 2,		July 3,
	2021		2020
Cash paid for amounts included in lease liabilities:
Operating cash flows from finance leases	$	173	$	218
Operating cash flows from operating leases	$	3,252	$	3,993
Financing cash flows from finance leases	$	9,024	$	680
Supplemental non-cash information:
Right-of-use assets obtained in exchange for new operating lease liabilities	$	3,257	$	2,164

During the six months ended July 2, 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 July 2, 2021, 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
2021 (remainder of year)	$	4,163		$	453
2022		7,290			907
2023		5,978			930
2024		5,184			954
2025		4,970			954
Thereafter		23,180			3,486
Total minimum lease payments		50,765			7,684
Less: Interest		(12,087	)		(1,491	)
Present value of lease liabilities	$	38,678		$	6,193