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Note 12 - Leases

12 Months Ended

Dec. 28, 2024

12.

Leases

We lease certain of our facilities, equipment and vehicles under non-cancelable operating and finance leases. Leases with initial terms with 12 months or less are not recorded in the consolidated balance sheet, but we recognized those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. Lease and non-lease components are included in the calculation of the right of use asset (“ROU”) asset and lease liabilities.

Our leases have remaining lease terms ranging from 1 year to 33 years, some of which include one or more options to extend the lease for up to 25 years. Our lease term includes renewal terms when we are reasonably certain that we will exercise the renewal options. We sublease certain leased assets to third parties, mainly as a result of unused space in our facilities.

Supplemental balance sheet information related to leases was as follows:

		December 28,			December 30,
(in thousands)	Classification	2024			2023
Assets:
Operating lease assets	Operating lease right-of-use assets	$	13,908		$	16,778
Finance lease assets	Property, plant and equipment, net ⁽¹⁾		9,676			247
Total lease assets		$	23,584		$	17,025
Liabilities:
Current:
Operating	Other accrued liabilities	$	5,296		$	5,122
Finance	Other accrued liabilities		8,418			11
Noncurrent:
Operating	Long-term lease liabilities		9,890			13,160
Finance	Long-term lease liabilities		3			15
Total lease liabilities		$	23,607		$	18,308

Weighted-average remaining lease term (years):
Operating leases			5.2			5.5
Finance leases			-			2.1

Weighted-average discount rate:
Operating leases			6.4	%		6.4	%
Finance leases			2.8	%		4.0	%

(1)

Finance lease assets are recorded net of accumulated amortization of $0.4 million and $0.3 million in fiscal 2024 and 2023, respectively. During the first quarter of fiscal 2024, we executed an agreement to purchase our leased facility in Malaysia for MYR 41.8 million, with the expectation that the title would transfer during fiscal 2024. We treated this transaction as a lease modification, and changed the classification to a finance lease, reducing our operating lease assets and liabilities by $0.4 million and increasing our finance lease assets and current lease liabilities by $8.8 million and $7.9 million, respectively. Due to a seller-imposed delay during the third quarter of fiscal 2024, the purchase date was delayed until fiscal 2025, triggering a modification of the finance lease resulting in the asset increasing to $9.5 million. At December 28, 2024, the finance lease liability decreased to $8.4 million, as a result of fluctuations in foreign currency exchange rates. On December 30, 2024, we completed the purchase of our leased facility in Melaka Malaysia.

The components of lease expense were as follows:

	December 28,			December 30,			December 31,
(in thousands)	2024			2023			2022
Operating leases	$	6,247		$	6,691		$	6,698
Variable lease expense		2,542			2,389			2,220
Short-term operating leases		4			16			4
Finance leases:
Amortization of leased assets		66			90			88
Interest on lease liabilities		269			1			1
Sublease income		(4	)		(29	)		(69	)
Net lease cost	$	9,124		$	9,158		$	8,942

Future minimum lease payments at December 28, 2024, are as follows:

	Operating			Finance
(in thousands)	leases			leases			Total
2025	$	6,064		$	8,425		$	14,489
2026		3,447			3			3,450
2027		1,720			-			1,720
2028		1,314			-			1,314
2029		1,332			-			1,332
Thereafter		4,431			-			4,431
Total lease payments		18,308			8,428			26,736
Less: Interest		(3,122	)		(7	)		(3,129	)
Present value of lease liabilities	$	15,186		$	8,421		$	23,607

Supplemental cash flow information related to leases was as follows:

	December 28,		December 30,		December 31,
(in thousands)	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,448	$	6,756	$	6,716
Operating cash flows from finance leases	$	263	$	1	$	1
Financing cash flows from finance leases	$	24	$	52	$	167
Leased assets obtained in exchange for new finance lease liabilities	$	9,543	$	-	$	-
Leased assets obtained in exchange for new operating lease liabilities	$	2,987	$	1,415	$	2,874
Financing lease assets acquired in MCT acquisition	$	-	$	19	$	-
Operating lease assets acquired in MCT acquisition	$	-	$	130	$	-