Note M - Lease Liabilities

6 Months Ended

Dec. 27, 2024

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

M. 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. Some of the Company’s leases contain non-lease components (e.g., common area, other maintenance costs, etc.) that relate to the lease components of the agreement. Non-lease components and the lease components to which they relate are accounted for as a single lease component.

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

	Condensed Consolidated Balance Sheet Location	December 27, 2024		June 30, 2024
Lease Assets
Right-of-use operating lease assets	Right-of-use operating lease assets	$	16,431	$	16,622
Right-of-use finance lease assets	Property, plant and equipment, net		5,435		5,210
Lease Liabilities
Right-of use operating lease liabilities, current	Current maturities of right-of use operating lease obligations	$	2,813	$	2,521
Right-of use operating lease liabilities, non-current	Right-of use operating lease obligations		13,656		14,376
Right of use finance lease liabilities, current	Accrued liabilities		880		713
Right of use finance lease liabilities, non-current	Other long-term liabilities		4,980		4,795

The components of lease expense were as follows:

	For the Quarter Ended						For the Two Quarters Ended
	December 27, 2024			December 29, 2023			December 27, 2024			December 29, 2023
Finance lease cost:
Amortization of right-of-use assets	$	237		$	175		$	469		$	397
Interest on lease liabilities		96			77			189			151
Operating lease cost		1,003			882			1,942			1,775
Short-term lease cost		22			6			33			9
Variable lease cost		139			99			239			199
Total lease cost		1,497			1,239			2,874			2,531
Less: Sublease income		(21	)		(20	)		(42	)		(41	)
Net lease cost	$	1,476		$	1,219		$	2,830		$	2,490

Other information related to leases was as follows:

	For the Quarter Ended				For the Two Quarters Ended
	December 27, 2024		December 29, 2023		December 27, 2024			December 29, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,084	$	934	$	2,086		$	1,871
Operating cash flows from finance leases		97		76		192			149
Financing cash flows from finance leases		471		207		1,017			471
Right-of-use-assets obtained in exchange for lease obligations:
Operating leases		1,255		188		1,581			188
Finance leases		224		123		732			657
Weighted average remaining lease term (years):
Operating leases						7.9			8.1
Finance lease						8.1			9.5
Weighted average discount rate:
Operating leases						8.5	%		7.6	%
Finance leases						6.4	%		5.8	%

Approximate future minimum rental commitments under non-cancellable leases as of December 27, 2024 were as follows:         

	Operating Leases			Finance Leases
2024	$	2,095		$	593
2025		3,869			1,154
2026		3,233			1,085
2027		2,339			986
2028		2,215			695
2029		1,774			526
Thereafter		7,661			2,285
Total future lease payments		23,186			7,324
Less: Amount representing interest		(6,717	)		(1,464	)
Present value of future payments	$	16,469		$	5,860