The Company has operating leases for office space, warehouse and manufacturing space, vehicles and certain equipment. 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. The Company accounts for the lease components and the non-lease components as a single lease component with the exception for the third-party logistics arrangements. The Company’s leases have remaining lease terms of one year to approximately 18 years, some of which may include options to extend the leases for up to 5 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 evaluates contracts at inception to determine whether they contain a lease, where the Company obtains the right to control an identified asset. The right-of-use assets and related liabilities for operating leases are included in Other assets, Accrued expenses, and Other long-term liabilities in the consolidated balance sheets. Finance leases are immaterial to the Company’s consolidated financial statements.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease contract. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of fixed 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.

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


	January 2, 2022		January 3, 2021
Operating leases right-of-use assets
Other assets	$	30.4	$	26.7
Operating lease liabilities
Accrued liabilities	$	13.4	$	15.1
Other liabilities		17.3		12.2

Operating lease cost for the fiscal year ended January 2, 2022, January 3, 2021 and December 29, 2019 was $21.0 million, $20.3 million and $22.2 million, respectively.

The following table contains supplemental cash flow information related to operating leases for the year ended January 2, 2022 and January 3, 2021:


	January 2, 2022		January 3, 2021		December 29, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	25.6	$	20.8	$	24.2
Right-of-use operating lease assets obtained in exchange for lease obligations		21.3		6.6		12.8

As of January 2, 2022, the Company has additional leases for office space and warehouse space that have not yet commenced of approximately $17.4 million. These leases are expected to commence in 2022 with lease terms of 9 and 7 years, respectively.

Lease term and discount rates of operating leases as of January 2, 2022 and January 3, 2021 were:


	January 2, 2022			January 3, 2021			December 29, 2019
Weighted-average remaining lease term (years)		3.5			2.9			3.1
Weighted-average discount rate		6.3	%		8.7	%		9.2	%

Maturities of operating lease liabilities as of January 2, 2022 were:


	Operating leases
2022	$	13.7
2023		8.7
2024		5.0
2025		2.6
2026		1.6
Thereafter		2.1
Total minimum lease payments	$	33.7
Less: imputed interest		3.0
Present value of lease liabilities	$	30.7

Certain assets, primarily diagnostics instruments, are leased to customers under contractual arrangements that typically include an operating or sales-type lease as well as performance obligations for reagents and other consumables. These contractual arrangements

are subject to termination provisions which are evaluated in determining the lease term for lease accounting purposes. 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 instruments are provided under operating lease arrangements, some portion or the entire lease revenue may be variable and subject to subsequent non-lease component (e.g., reagent) sales. The allocation of revenue between the lease and non-lease components is based on stand-alone selling prices. Variable lease revenue and fixed lease revenue represented approximately 4% and 1%, respectively, of the Company’s consolidated Net revenue for the fiscal years ended January 2, 2022, January 3, 2021, and December 29, 2019.

The Company’s reagent rental agreements may require the customers to commit to making minimum reagent purchases over the lease term, which is typically 5 years. In certain jurisdictions, the Company has concluded that these minimum purchase commitments represent legally enforceable rights pursuant to the lease. If a contract contains a legally enforceable minimum purchase commitment, the minimums are considered in-substance fixed lease payments and the Company will evaluate the probability of collecting the lease payments. If collection is probable, for operating leases, the lease payments will be recognized on a straight-line basis over the lease term. If collection is not probable, for reagent rental agreements classified as operating leases, the lease income recognized by the Company is limited to the lesser of the income that would be recognized on a straight-line basis over the lease term or the lease payments, including variable lease payments, that have been collected from the lessee. In certain other jurisdictions, the Company has concluded that the minimum purchase commitments within the Company’s reagent rental agreements are not legally enforceable and, therefore, the entire contract consideration is concluded to be variable. The Company recognizes the variable payments that relate to the lease component as rental income when the variability is resolved, and the underlying reagent sale occurs.

As of January 2, 2022 and January 3, 2021, the Company’s equipment leased to customers under operating-type leases was:


	January 2, 2022			January 3, 2021
Customer leased instruments	$	775.9		$	727.3
Less: Accumulated depreciation		(497.0	)		(432.8	)
Total Customer leased instruments, net	$	278.9		$	294.5