LEASES

3 Months Ended

Dec. 28, 2019

LEASES

We have entered into various non-cancellable operating and finance lease agreements for certain of our offices, manufacturing, technology, sales support and service centers, equipment, and vehicles. We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. Our lease terms may include one or more options to extend the lease terms, for periods from one year to 20 years, when it is reasonably certain that we will exercise that option. As of December 28, 2019, no options were recognized as right-of-use ("ROU") assets or lease liabilities. We have lease agreements with lease and non-lease components,

and non-lease components are accounted for separately and not included in our leased assets and corresponding liabilities. We have elected not to present short-term leases on the Consolidated Condensed Balance Sheet as these leases have a lease term of 12 months or less at lease inception.

Operating leases are included in operating ROU assets, current operating lease liabilities and non current operating lease liabilities, and finance leases are in included in property, plant and equipment, accrued expenses and other current liabilities, and other liabilities on the Consolidated Condensed Balance Sheet. As of December 28, 2019, our finance leases are not material.

The following table shows the various components of lease expense:



	Three months ended
(in thousands)	December 28, 2019
Operating lease expense ⁽¹⁾	$	1,757

(1) Operating lease expense includes short-term lease expense, which is immaterial for the three month ended December 28, 2019.

The following table shows the cash flows arising from lease transactions. Cash payments related to short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below:



	As of
(in thousands)	December 28, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	1,757

The following table shows the weighted-average lease terms and discount rates for operating leases:



	As of
	December 28, 2019
Operating leases:
Weighted-average remaining lease term:	5.0		years
Weighted-average discount rate:	4.8	%

Future lease payments, excluding short-term leases, as of December 28, 2019, are detailed as follows:



(in thousands)	Operating leases
Remainder of 2020	$	5,048
2021	5,265
2022	4,750
2023	4,639
2024	2,278
Thereafter	3,662
Total minimum lease payments	25,642
Less: Interest	3,010
Present value of lease obligations	22,632
Less: Current portion	5,427
Long-term portion of lease obligations	$	17,205

Future lease payments under operating leases prior to adoption ASC 842 were as follows:



			Payments due by fiscal year
(in thousands)	Total		2020		2021		2022		2023		2024		Thereafter
Operating lease obligations ⁽¹⁾	$	16,273	$	4,089	$	2,576	$	2,182	$	1,967	$	1,822	$	3,637

(1) Pursuant to ASC No. 840, Leases ("ASC 840"), for lessee's involvement in asset construction, the Company was considered to be the owner of the Building (as defined in Note 9 below) during the construction phase due to its involvement in the asset construction. As a result of the Company's continued involvement during the lease term, the Company did not fulfill the criteria to apply sale-leaseback accounting under ASC 840. Therefore, at completion of construction, the Building remained on the Consolidated Condensed Balance Sheet, and the corresponding financing obligation was reclassified to long-term liability. As of September 28, 2019, we recorded a financing obligation related to the Building of $15.0 million (see Note 9 below). The financing obligation is not reflected in the table above.