Leases

9 Months Ended

Oct. 03, 2021

Leases [Abstract]

Leases

Leases

We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space; as well as vehicles and certain equipment. We make certain judgments in determining whether a contract contains a lease in accordance with ASU 2016-02. Our leases have remaining lease terms of less than 1 year to 15 years; some of which include extension and termination options for an additional 15 years or within 1 year, respectively. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Our lease agreements do not contain any material residual value guarantees or material variable lease payments.

We have entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on our balance sheet, and for the three and nine months ended October 3, 2021 and September 27, 2020, the rent expense for short-term leases was not material.

We have certain property and equipment lease contracts that may contain lease and non-lease components, and we have elected to utilize the practical expedient to account for these components together as a single combined lease component.

As the rate implicit in most of our leases is not readily determinable, we use the incremental borrowing rate to determine the present value of the lease payments, which is unique to each leased asset, and is based upon the term of the lease, commencement date of the lease, local currency of the leased asset, and the credit rating of the legal entity leasing the asset.

We are party to a lease guarantee, whereby Belden has covenanted the lease payments for one of Snell Advanced Media's (SAM) property leases through its 2035 expiration date. The lease guarantee was executed in 2018 following the acquisition of SAM, which we subsequently sold on July 2, 2020 as part of the Grass Valley disposal group (see Note 5). This lease guarantee was retained by Belden and not transferred to Black Dragon Capital as part of the sale of Grass Valley. Belden would be required to make lease payments only if the primary obligor, Black Dragon Capital, fails to make the payments. As of October 3, 2021, the SAM lease has approximately $20.2 million of lease payments remaining, but we do not believe that it is probable that we have incurred a liability from the guarantee.

The components of lease expense were as follows:

	Three Months Ended				Nine Months Ended
	October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020
	(In thousands)
Operating lease cost	$	5,112	$	3,571	$	13,958	$	10,512
Finance lease cost
Amortization of right-of-use asset	$	196	$	35	$	251	$	101
Interest on lease liabilities	4		4		9		13
Total finance lease cost	$	200	$	39	$	260	$	114

Supplemental cash flow information related to leases was as follows:

	Three Months Ended				Nine Months Ended
	October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,480	$	3,891	$	12,853	$	11,352
Operating cash flows from finance leases	5		4		10		13
Financing cash flows from finance leases	3,041		43		3,116		130

Supplemental balance sheet information related to leases was as follows:

	October 3, 2021		December 31, 2020
	(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets	$	57,141	$	54,787
Accrued liabilities	$	16,292	$	14,742
Long-term operating lease liabilities	47,054		46,398
Total operating lease liabilities	$	63,346	$	61,140
Finance leases:
Other long-lived assets, at cost	$	3,662	$	764
Accumulated depreciation	(332)		(483)
Other long-lived assets, net	$	3,330	$	281

Weighted Average Remaining Lease Term
Operating leases	5 years		5 years
Finance leases	4 years		3 years
Weighted Average Discount Rate
Operating leases	6.0	%	6.6	%
Finance leases	4.5	%	4.9	%

The following table summarizes maturities of lease liabilities as of October 3, 2021 and December 31, 2020, respectively:

	October 3, 2021		December 31, 2020
	(In thousands)
2021	$	5,270	$	19,250
2022	19,736		16,305
2023	15,624		12,552
2024	12,251		9,516
2025	11,022		8,718
Thereafter	11,910		8,901
Total	$	75,813	$	75,242

Leases

Leases

We have operating and finance leases for properties, including manufacturing facilities, warehouses, and office space; as well as vehicles and certain equipment. We make certain judgments in determining whether a contract contains a lease in accordance with ASU 2016-02. Our leases have remaining lease terms of less than 1 year to 15 years; some of which include extension and termination options for an additional 15 years or within 1 year, respectively. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain as of the commencement date of the lease. Our lease agreements do not contain any material residual value guarantees or material variable lease payments.

We have entered into various short-term operating leases with an initial term of twelve months or less. These leases are not recorded on our balance sheet, and for the three and nine months ended October 3, 2021 and September 27, 2020, the rent expense for short-term leases was not material.

We have certain property and equipment lease contracts that may contain lease and non-lease components, and we have elected to utilize the practical expedient to account for these components together as a single combined lease component.

As the rate implicit in most of our leases is not readily determinable, we use the incremental borrowing rate to determine the present value of the lease payments, which is unique to each leased asset, and is based upon the term of the lease, commencement date of the lease, local currency of the leased asset, and the credit rating of the legal entity leasing the asset.

We are party to a lease guarantee, whereby Belden has covenanted the lease payments for one of Snell Advanced Media's (SAM) property leases through its 2035 expiration date. The lease guarantee was executed in 2018 following the acquisition of SAM, which we subsequently sold on July 2, 2020 as part of the Grass Valley disposal group (see Note 5). This lease guarantee was retained by Belden and not transferred to Black Dragon Capital as part of the sale of Grass Valley. Belden would be required to make lease payments only if the primary obligor, Black Dragon Capital, fails to make the payments. As of October 3, 2021, the SAM lease has approximately $20.2 million of lease payments remaining, but we do not believe that it is probable that we have incurred a liability from the guarantee.

The components of lease expense were as follows:

	Three Months Ended				Nine Months Ended
	October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020
	(In thousands)
Operating lease cost	$	5,112	$	3,571	$	13,958	$	10,512
Finance lease cost
Amortization of right-of-use asset	$	196	$	35	$	251	$	101
Interest on lease liabilities	4		4		9		13
Total finance lease cost	$	200	$	39	$	260	$	114

Supplemental cash flow information related to leases was as follows:

	Three Months Ended				Nine Months Ended
	October 3, 2021		September 27, 2020		October 3, 2021		September 27, 2020
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,480	$	3,891	$	12,853	$	11,352
Operating cash flows from finance leases	5		4		10		13
Financing cash flows from finance leases	3,041		43		3,116		130

Supplemental balance sheet information related to leases was as follows:

	October 3, 2021		December 31, 2020
	(In thousands, except lease term and discount rate)
Operating leases:
Total operating lease right-of-use assets	$	57,141	$	54,787
Accrued liabilities	$	16,292	$	14,742
Long-term operating lease liabilities	47,054		46,398
Total operating lease liabilities	$	63,346	$	61,140
Finance leases:
Other long-lived assets, at cost	$	3,662	$	764
Accumulated depreciation	(332)		(483)
Other long-lived assets, net	$	3,330	$	281

Weighted Average Remaining Lease Term
Operating leases	5 years		5 years
Finance leases	4 years		3 years
Weighted Average Discount Rate
Operating leases	6.0	%	6.6	%
Finance leases	4.5	%	4.9	%

The following table summarizes maturities of lease liabilities as of October 3, 2021 and December 31, 2020, respectively:

	October 3, 2021		December 31, 2020
	(In thousands)
2021	$	5,270	$	19,250
2022	19,736		16,305
2023	15,624		12,552
2024	12,251		9,516
2025	11,022		8,718
Thereafter	11,910		8,901
Total	$	75,813	$	75,242