Note N - Lease Obligations

6 Months Ended

Dec. 30, 2022

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

N. Lease Liabilities

The Company leases certain office and warehouse space, as well as production and office equipment.

The Company determines if an arrangement is a lease at contract inception. The lease term begins upon lease commencement, which is when the Company takes possession of the asset and may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised. As its lease agreements typically do not provide an implicit rate, the Company primarily uses an incremental borrowing rate based upon the information available at lease commencement. In determining the incremental borrowing rate, the Company considers its current borrowing rate, the term of the lease, and the economic environments where the lease activity is concentrated.

The components of lease expense were as follows:

	For the Quarter Ended						For the Two Quarters Ended
	December 30, 2022			December 31, 2021			December 30, 2022			December 31, 2021
Finance lease cost:
Amortization of right-of-use assets	$	156		$	168		$	311		$	331
Interest on lease liabilities		67			71			132			142
Operating lease cost		686			698			1,397			1,391
Short-term lease cost		(10	)		37			3			40
Variable lease cost		67			42			108			81
Total lease cost		966			1,016			1,952			1,985
Less: Sublease income		(18	)		(19	)		(35	)		(39	)
Net lease cost	$	948		$	997		$	1,917		$	1,946

Other information related to leases was as follows:

	For the Quarter Ended				For the Two Quarters Ended
	December 30, 2022		December 31, 2021		December 30, 2022			December 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	777	$	737	$	1,473		$	1,479
Operating cash flows from finance leases		215		211		420			416
Financing cash flows from finance leases		67		71		132			142
Right-of-use-assets obtained in exchange for lease obligations:
Operating leases		990		232		1,518			396
Finance leases		269		133		320			307
Weighted average remaining lease term (years):
Operating leases						8.3			9.3
Finance lease						10.8			11.5
Weighted average discount rate:
Operating leases						7.2	%		7.2	%
Finance leases						5.2	%		5.2	%

Approximate future minimum rental commitments under non-cancellable leases as of December 30, 2022 were as follows:         

	Operating Leases			Finance Leases
2023	$	1,507		$	877
2024		2,517			875
2025		1,619			644
2026		1,434			578
2027		1,428			519
Thereafter		7,636			4,448
Total future lease payments		16,142			7,940
Less: Amount representing interest		(3,321	)		(2,899	)
Present value of future payments	$	12,821		$	5,041

The following table provides a summary of leases recorded on the condensed consolidated balance sheet.

	Balance Sheet Location	December 30, 2022		June 30, 2022
Lease Assets
Operating lease right-of-use assets	Right-of-use assets operating leases	$	12,807	$	12,685
Finance lease right-of-use assets	Property, plant and equipment, net		4,563		4,805
Lease Liabilities
Operating lease liabilities	Accrued liabilities	$	2,543	$	2,127
Operating lease liabilities	Lease obligations		10,278		10,575
Finance lease liabilities	Accrued liabilities		615		576
Finance lease liabilities	Other long-term liabilities		4,426		4,440