Note

– Leases

The Company currently leases plants, warehouses, offices, store facilities, and equipment under various leases through fiscal

2034.

Most lease agreements are of a long-term nature (over a year), although the Company does also enter into short-term leases, primarily for seasonal needs. Lease agreements

may

contain renewal options and rent escalation clauses and require the Company to pay real estate taxes, insurance, common area maintenance and operating expenses applicable to the leased properties. The Company accounts for its leases in accordance with ASC

842.

At contract inception, we determine whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time, by assessing whether we have the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset.

At the lease commencement date, we determine if a lease should be classified as an operating or a finance lease (we currently have

finance leases) and recognize a corresponding lease liability and a right-of-use asset on our Balance Sheet. The lease liability is initially and subsequently measured as the present value of the remaining fixed minimum rental payments (including base rent and fixed common area maintenance) using discount rates as of the commencement date. Variable payments (including most utilities, real estate taxes, insurance and variable common area maintenance) are expensed as incurred. The right-of-use asset is initially and subsequently measured at the carrying amount of the lease liability adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use asset. Right-of-use assets are assessed for impairment using the long-lived assets impairment guidance. The discount rate used to determine the present value of lease payments is our estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as we generally cannot determine the interest rate implicit in the lease.

We recognize expense for our operating leases on a straight-line basis over the lease term. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Renewal option periods are included in the measurement of lease liability, where the exercise is reasonably certain to occur. Key estimates and judgments in accounting for leases include how we determine: (

) lease payments, (

) lease term and (

) the discount rate used in calculating the lease liability.

Additional information related to our leases is as follows:

	Three Months Ended			Six Months Ended
	December 29, 2019			December 29, 2019
	(in thousands)
Lease costs:
Operating lease costs	$	3,666		$	7,306
Variable lease costs		4,346			7,886
Short-term lease cost		3,905			4,970
Sublease income		(208	)		(478	)
Total lease costs	$	11,709		$	19,684

	Six Months Ended
	December 29, 2019
	(in thousands)
Cash paid for amounts included in measurement of operating lease liabilities	$	6,807
Right-of-use assets obtained in exchange for new operating lease liabilities	$	178

	December 29, 2019
	(in thousands)
Weighted-average remaining lease term - operating leases	9.7 years
Weighted-discount rate - operating leases		3.8	%

Maturities of lease liabilities in accordance with ASC

842

as of

December 29, 2019

are as follows (in thousands):

Remainder of 2020	$	5,402
2021		11,679
2022		10,310
2023		9,901
2024		9,452
Thereafter		44,888
Total Future Minimum Lease Payments	$	91,632
Less Imputed Remaining Interest		16,378
Total	$	75,254

June 30, 2019,

in accordance with ASC

840,

future minimum rental payments under non-cancelable operating leases with initial terms of

one

year or more consisted of the following (in thousands):

2020	$	16,588
2021		13,490
2022		12,081
2023		9,957
2024		9,498
Thereafter		44,953
Total Future Minimum Lease Payments	$	106,567