LEASES

12 Months Ended

Apr. 01, 2023

LEASES

Lessee Activity

The Company has operating leases for office space, land, warehouse and manufacturing space, R&D laboratories, vehicles and certain equipment. Finance leases are not significant. Leases with an initial term of 12 months or less are generally not recorded on the balance sheet and expense for these leases is recognized on a straight-line basis over the lease term. For leases executed in fiscal 2020 and later, the Company accounts for the lease components and the non-lease components as a single lease component. The Company’s leases have remaining lease terms of 1 year to approximately 30 years, some of which may include options to extend the leases for up to 10 years and some include options to terminate early. These options have been included in the determination of the lease liability when it is reasonably certain that the option will be exercised. The Company does not have any leases that include residual value guarantees.

The Company determines whether an arrangement is or contains a lease based on the unique facts and circumstances present at the inception of an arrangement. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

During fiscal 2021, the Company entered into a lease for manufacturing space in Clinton, PA. In fiscal 2023, the Company’s manufacturing operations in Leetsdale, PA were relocated to the Clinton, PA facility. The lease term associated with the new manufacturing facility is 15 years and 7 months and includes two five year renewal options followed by one four year renewal option. During fiscal 2021, the Company recorded a right-of-use asset of $11.3 million and corresponding liabilities of $15.4 million upon commencement of the lease term in May 2020. In addition, the Company recorded a $4.1 million lease incentive receivable associated with this lease agreement which was received during fiscal 2021.

The following table presents supplemental balance sheet information related to the Company’s operating leases:


(In thousands)	April 1, 2023		April 2, 2022
Assets
Operating lease right-of-use assets in Other long-term assets	$	53,413	$	52,749
Liabilities
Operating lease liabilities in Other current liabilities	$	7,162	$	7,196
Operating lease liabilities in Other long-term liabilities	$	55,903	$	55,704

The following table presents the weighted average remaining lease term and discount rate information related to our operating leases:


	April 1, 2023		April 2, 2022
Weighted average remaining lease term	9.0 years		10.0 years
Weighted average discount rate	4.95	%	4.58	%

The Company’s operating lease costs were $10.6 million, $11.0 million and $11.7 million during fiscal 2023, 2022 and 2021, respectively.

The following table presents supplemental cash flow information related to our operating leases:


(In thousands)	April 1, 2023		April 2, 2022		April 3, 2021
Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows used for operating leases	$	11,450	$	11,014	$	10,456
Right of use assets obtained in exchange for new operating lease liabilities	$	211	$	587	$	29,595

The following table presents the maturities of our operating lease liabilities as of April 1, 2023:


Fiscal Year (In thousands)	Operating Leases
2024	$	9,813
2025	9,007
2026	8,601
2027	9,073
2028	7,490
Thereafter	33,646
Total future minimum operating lease payments	77,630
Less: imputed interest	(14,565)
Present value of operating lease liabilities	$	63,065

Lessor Activity

Assets on the Company’s balance sheet classified as Haemonetics equipment primarily consists of medical devices installed at customer sites but owned by Haemonetics. These devices are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as the purchase and consumption of a certain level of disposable products. Sales-type leases are not significant. Contract terms vary by customer and may include options to terminate the contract or options to extend the contract. Where devices are provided under operating lease arrangements, a substantial majority of the entire lease revenue is variable and subject to subsequent non-lease component (disposable products) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Operating lease revenue represents approximately 3 percent of the Company’s total net sales.