Leases

12 Months Ended

Dec. 31, 2023

We have entered into various operating lease agreements for automobiles, offices and manufacturing facilities throughout the world. At December 31, 2023, our operating leases had remaining lease terms of up to 37 years, including any reasonably probable extensions.

Lease balances within our consolidated balance sheets were as follows:


(In thousands)	December 31, 2023		December 31, 2022
Assets:
Operating lease right-of-use assets	$	18,693	$	21,599
Liabilities:
Other accrued liabilities	$	4,813	$	5,509
Long-term operating lease obligations	12,560		15,027
Total lease liabilities	$	17,373	$	20,536

Operating lease expense, including variable and short-term lease costs which were insignificant to the total, operating lease cash flows and supplemental cash flow information were as follows:


	Year Ended December 31,
(In thousands)	2023		2022		2021
Cost of sales	$	3,012	$	2,822	$	2,508
Selling, general and administrative expenses	4,378		4,474		4,151
Total operating lease expense	$	7,390	$	7,296	$	6,659
Operating cash outflows from operating leases	$	7,736	$	7,427	$	6,555
Operating lease right-of-use assets obtained in exchange for lease obligations	$	4,360	$	8,756	$	7,017
Non-cash release of operating lease obligations (1)	$	—	$	—	$	654

(1)During the year ended December 31, 2021, we were released from our guarantee of the lease obligation related to our Ohio call center which was sold in February 2020.

We entered into lease amendments for our southwestern China and Mexico factories during the year ended December 31, 2023 as a part of our manufacturing footprint optimization efforts. As a result of these modifications, our operating lease right-of-use assets decreased by $1.2 million and our total lease liabilities decreased by $1.3 million.

The weighted average remaining lease liability term and the weighted average discount rate were as follows:


	Year Ended December 31,
	2023		2022
Weighted average lease liability term (in years)	4.9		5.1
Weighted average discount rate	5.04	%	3.82	%

The following table reconciles the undiscounted cash flows for each of the first five years and thereafter to the operating lease liabilities recognized in our consolidated balance sheet at December 31, 2023. The reconciliation excludes short-term leases that are not recorded on the balance sheet.


(In thousands)
2024	$	5,485
2025	4,478
2026	3,442
2027	2,696
2028	1,243
Thereafter	2,532
Total lease payments	19,876
Less: imputed interest	(2,503)
Total lease liabilities	$	17,373

At December 31, 2023, we did not have any operating leases that had not yet commenced.

Prepaid Land Lease

We operate one factory within the PRC on which the land is leased from the government as of December 31, 2023. This land lease was prepaid to the PRC government at the time our subsidiary occupied the land. We have obtained a land-use right certificate for the land pertaining to this factory.

The factory is located in the city of Yangzhou in the Jiangsu province. The remaining net book value of this operating lease ROU was $2.2 million at December 31, 2023, and is being amortized on a straight-line basis over the remaining term of approximately 35 years. The buildings located on this land had a net book value of $12.3 million at December 31, 2023 and are being depreciated over a remaining weighted average period of approximately 16 years.