LEASES

3 Months Ended

Apr. 03, 2021

The Company leases certain manufacturing, warehouse and distribution locations, vehicles and equipment, including fleet vehicles. Many of these leases have options to terminate prior to or extend beyond the end of the term. The exercise of the majority of lease renewal options is at the Company’s sole discretion. Some lease agreements have variable payments, the majority of these are real estate agreements in which future increases in rent are based on an index. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company accounts for lease and non-lease components as a single lease component for all leases other than leases of durable tooling. The Company excludes leases with an initial term of 12 months or less from the consolidated balance sheets and recognizes related lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the reasonably expected holding period at commencement date. Few of the Company’s lease contracts provide a readily determinable implicit rate. For these contracts, an estimated incremental borrowing rate (“IBR”) is utilized, based on information available at the inception of the lease. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.

Accounting for leases may require judgment, including determining whether a contract contains a lease, the incremental borrowing rates to utilize for leases without a stated implicit rate, the reasonably certain holding period for a leased asset, and the allocation of consideration to lease and non-lease components. The allocation of the lease and non-lease components for leases of durable tooling is based on the Company’s best estimate of standalone price.

Weighted average information about the Company’s lease portfolio as of April 3, 2021 was as follows:


Weighted-average remaining lease term	5.5 years
Weighted-average IBR	6.01	%

Operating lease costs were as follows (in thousands):


	Three Months Ended
		April 3, 2021		April 4, 2020
Operating lease costs
Fixed lease costs		$	25,967	$	27,930
Variable lease costs(1)		24,726		19,588

(1) Includes short-term lease costs, which are immaterial.

Cash and non-cash activities were as follows (in thousands):


	Three Months Ended
		April 3, 2021		April 4, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		$	27,019	$	30,274

Right-of-use assets obtained in exchange for new operating lease liabilities		$	5,704	$	4,261

Future minimum lease payments under non-cancelable leases as of April 3, 2021 are as follows (in thousands):


	Operating Leases
2021 (excluding the three months ended April 3, 2021)	$	59,841
2022	72,420
2023	46,441
2024	35,189
2025	28,257
Thereafter	69,702
Total future minimum lease payments	311,850
Less: interest	48,136
Present value of future minimum lease payments	$	263,714

As of April 3, 2021
Current portion of lease liabilities	$	69,042
Long-term portion of lease liabilities	194,672
Total	$	263,714