Leases

9 Months Ended

Sep. 29, 2019

The Company determines if an arrangement is or contains a lease at contract inception. Right-of-use (ROU) assets related to leases are recorded in Lease assets and lease liabilities are recorded in Accrued liabilities and Lease liabilities on the Consolidated balance sheets.

ROU 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. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. The ROU asset also includes prepaid lease payments and initial direct costs and is reduced for lease incentives paid by the lessor. The discount rate used to determine the present value is generally the Company's incremental borrowing rate because the implicit rate in the lease is not readily determinable. The lease term used to calculate the ROU asset and lease liabilities includes periods covered by options to extend or terminate when the Company is reasonably certain the lease term will include these optional periods.

The Company has lease arrangements for sales and administrative offices, manufacturing and distribution facilities, product testing facilities, equipment and vehicles. All of the Company’s lease arrangements are accounted for as operating leases. The Company’s leases have remaining lease terms ranging from 1 to 13 years, some of which include options to extend the leases for periods generally not greater than 5 years and some of which include options to terminate the leases within 1 year. Certain leases also include options to purchase the leased asset. Leases do not contain any material residual value guarantees or material restrictive covenants.

Operating lease expense for the three and nine months ended September 29, 2019 was $7.4 million and $20.1 million, respectively. This includes variable lease costs related to leases involving assets operated by a third-party of approximately $1.6 million and $4.8 million for the three and nine months ended September 29, 2019, respectively. Other variable and short-term lease costs were not material.

Balance sheet information related to the Company's leases was as follows (in thousands):



	September 29, 2019
Lease assets	$	55,905

Accrued liabilities	$	18,421
Lease liabilities	39,408
	$	57,829

Future maturities of the Company's lease liabilities as of September 29, 2019 were as follows (in thousands):



	Operating Leases
2019	$	5,421
2020	18,781
2021	15,743
2022	10,507
2023	4,396
Thereafter	6,649
Future lease payments	61,497
Less present value discount	3,668
Lease liability	$	57,829

Other lease information was as follows (dollars in thousands):



	Three months ended		Nine months ended
	September 29, 2019		September 29, 2019
Operating cash outflows for amounts included in the measurement of lease liabilities	$	6,073	$	15,944
Right-of-use assets obtained in exchange for lease obligations	$	6,724	$	10,986



	September 29, 2019
Weighted-average remaining lease term (in years)	4.23
Weighted-average discount rate	3.3	%