Leases

9 Months Ended

Oct. 01, 2022

NOTE 10. LEASES

We lease certain of our manufacturing facilities under operating leases. We also lease production equipment, vehicles, computer equipment, storage units and office equipment under operating leases. Our leases have remaining lease terms of 1 year to 10 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. All of our leases are operating leases. We did not recognize right-of-use assets or lease liabilities for certain short-term leases that are month-to-month leases. The lease expense relating to these leases is not significant.

The components of lease expense for the three and nine months ended October 1, 2022 and October 2, 2021, are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2022		2021		2022		2021

Operating lease cost	$	5,101	$	4,213	$	14,941	$	10,990
Short-term lease cost		2,668		2,280		7,488		6,696
Total lease cost	$	7,769	$	6,493	$	22,429	$	17,686

Other information relating to leases for the three and nine months ended October 1, 2022 and October 2, 2021, are as follows (in thousands, except years and percentages):


	Three Months Ended						Nine Months Ended
	October 1,			October 2,			October 1,			October 2,
	2022			2021			2022			2021
Supplemental cash flows information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows relating to operating leases	$	(4,913	)	$	(3,435	)	$	(14,230	)	$	(9,503	)

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,363		$	933		$	13,625		$	47,838

Weighted average remaining lease term in years
Operating leases		6.39			6.39			6.39			6.39

Weighted average discount rate
Operating leases		5.4	%		5.5	%		5.4	%		5.5	%

Future maturities under operating leases were as follows at October 1, 2022 and January 1, 2022 (in thousands):


	October 1,			January 1,
	2022			2022
Remainder of 2022	$	5,005		$	17,929
2023		19,735			17,577
2024		19,140			16,990
2025		17,998			15,987
2026		16,799			15,025
2027		15,847			14,358
Thereafter		22,978			17,891

Total future minimum lease payments		117,502			115,757

Less: Imputed interest		(17,361	)		(18,674	)

Operating lease liability - total	$	100,141		$	97,083

Reported as of October 1, 2022 and January 2, 2021:
Current portion of operating lease liability	$	15,247		$	13,180
Operating lease liability, less current portion		84,894			83,903

Operating lease liability - total	$	100,141		$	97,083

As of October 1, 2022, we had no additional operating or finance leases that have not yet commenced. Our operating leases expire at various times through 2032. Lease expense was $7.8 million for the three months ended October 1, 2022 and was $6.5 million for the three months ended October 2, 2021. Of the $7.8 million for the three months ended October 1, 2022, $4.0 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Of the $6.5 million for the three months ended October 2, 2021, $0.5 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Lease expense was $22.4 million for the nine months ended October 1, 2022 and was $17.7 million for the nine months ended October 2, 2021. Of the $22.4 million for the nine months ended October 1, 2022, $11.4 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses. Of the $17.7 million for the nine months ended October 2, 2021, $6.9 million is classified as cost of sales in the accompanying condensed consolidated statement of operations, with the remainder classified within selling, general and administrative expenses.