Leases

9 Months Ended

Oct. 01, 2023

The Company occupies offices and uses certain equipment under various operating lease arrangements. The Company has no material finance leases. The Company's leases have remaining lease terms of 1 to 15 years, some of which include options to extend lease terms or options to terminate current lease terms at certain times, subject to notice requirements set out in the lease agreement. Payments under certain of the lease agreements may be subject to adjustment based on a consumer price index or other inflationary indices. The lease liability for such lease agreements as of the adoption date, was based on fixed payments as of the adoption date. Any adjustments to these payments based on the related indices will be recorded to expense as incurred. Leases with an expected term of 12 months or less are not capitalized. Lease expense under such leases is recorded straight line over the life of the lease. The Company capitalizes non-lease components for equipment leases, but expenses non-lease components as incurred for real estate leases.

The rent expense under such arrangements and similar arrangements that do not qualify as leases under ASU 2016-02, net of sublease income amounted to $21.7 million and $70.0 million for the quarter and nine months ended October 1, 2023, respectively, and $24.2 million and $67.4 million for the quarter and nine months ended September 25, 2022, respectively, and was not material to the Company's financial statements. Due to the held for sale criteria being met as of October 1, 2023, certain lease assets attributable to the non-core eOne Film and TV businesses are no longer being depreciated. Expenses related to short-term leases (expected terms less than 12 months) or variable lease payments were not material in the quarters or nine months ended October 1, 2023 or September 25, 2022.

Information related to the Company’s leases for the quarters and nine months ended October 1, 2023 and September 25, 2022 is as follows:


	Quarter Ended						Nine Months Ended
	October 1, 2023 (1)			September 25, 2022			October 1, 2023 (1)			September 25, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	11.5		$	12.7		$	37.3		39.4
Right-of-use assets obtained in exchange for lease obligations:
Operating leases net of lease modifications	$	9.2		$	0.4		$	76.9		—

Weighted Average Remaining Lease Term
Operating leases	7.4 years			4.5 years			7.4 years			4.5 years
Weighted Average Discount Rate
Operating leases	3.8		%	3.4		%	3.8		%	3.4	%

(1) Includes certain amounts attributable to the non-core eOne Film and TV businesses, which were transferred to Assets held for sale and Liabilities held for sale as of October 1, 2023. See note 15 for additional information.

The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our consolidated balance sheets as of October 1, 2023:


	October 1, 2023 (1)
2023 (excluding the nine months ended October 1, 2023)	$	11.0
2024	41.6
2025	36.0
2026	30.0
2027	21.6
2028 and thereafter	69.8
Total future lease payments	210.0
Less imputed interest	63.5
Present value of future operating lease payments	146.5
Less current portion of operating lease liabilities (2)	28.1
Non-current operating lease liability (3)	118.4
Operating lease right-of-use assets, net (4)	$	121.9

(1) Includes certain assets and liabilities attributable to the non-core eOne Film and TV businesses, which were transferred to Assets held for sale and Liabilities held for sale as of October 1, 2023. See note 15 for additional information.

(2) Included in Accrued liabilities on the consolidated balance sheets.

(3) Included in Other liabilities on the consolidated balance sheets.

(4) Included in Property, plant, and equipment on the consolidated balance sheets.