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Leases

12 Months Ended

Mar. 28, 2020

Leases

The Company leases certain production and retail locations, office space and equipment. The Company determines if a contract or arrangement is, or contains, a lease at inception. Lease agreements with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheet. Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease term by one to three years or more. Generally, the exercise of lease renewal options is at the Company's discretion. Some agreements also include options to purchase the leased property. The estimated life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option that the Company is reasonably certain to exercise.

Certain of the Company's lease agreements include rental payments adjusted periodically for inflation. These lease agreements do not contain any material residual value guarantees or material restrictive covenants.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments in accordance with the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since the Company's leases do not provide a readily determinable implicit interest rate, the Company estimates an incremental borrowing rate. In determining the estimated incremental borrowing rate, the Company considers the lease period and comparable market interest rates, as well as any other information available at the lease commencement date. The lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

The following table provides information about the financial statement classification of the Company's lease balances reported within the Consolidated Balance Sheet as of March 28, 2020 (in thousands):



	Classification	March 28, 2020
ROU assets
Operating lease assets	Operating lease right-of-use assets	$	13,894
Finance lease assets	Property, plant and equipment, net (1)	1,025
Total lease assets		$	14,919

Lease Liabilities
Current:
Operating lease liabilities	Accrued expenses and other current liabilities	$	4,170
Finance lease liabilities	Current portion of securitized financings and other	77
Non-current:
Operating lease liabilities	Operating lease liabilities	10,743
Finance lease liabilities	Securitized financings and other	289
Total lease liabilities		$	15,279

(1) Recorded net of accumulated amortization of $103,000 as of March 28, 2020.

The following table provides information about the financial statement classification of the Company's lease expenses reported within the Consolidated Statement of Comprehensive Income for the year ended March 28, 2020 (in thousands):



		Year Ended
Lease Expense Category	Classification	March 28, 2020
Operating lease expense ⁽¹⁾
	Cost of sales	$	834
	Selling, general and administrative expenses	3,119
Finance lease expense:
Amortization of leased assets	Cost of sales	39
Interest on lease liabilities	Interest expense	52
Total lease expense		$	4,044

(1) Excludes short-term and variable lease expenses, which are immaterial.

Cash payments for operating and finance leases for the year ended March 28, 2020 were $3.4 million and $142,000, respectively.

The present value of the minimum payments for future fiscal years under non-cancelable leases as of March 28, 2020 were as follows (in thousands):



	Operating Leases			Finance Leases			Total
2021	$	4,199		$	79		$	4,278
2022	3,286			73			3,359
2023	2,559			73			2,632
2024	2,216			73			2,289
2025	1,407			73			1,480
Thereafter	3,311			49			3,360
Total lease payments	16,978			420			17,398
Less: Amount representing interest	(2,065		)	(54		)	(2,119		)
Present value of lease liabilities	$	14,913		$	366		$	15,279

The following table provides information about the weighted average remaining lease terms and weighted average discount rates as of March 28, 2020:



	Remaining Lease Term (Years)	Discount Rate
Operating leases	5.5	4.5	%
Finance leases	5.5	5.0	%

Operating Leases pre-Topic 842 adoption:

The Company has non-cancelable operating leases with third parties, primarily for administrative and distribution center space and computer equipment. The Company's facility leases generally provide for periodic rent increases and many contain escalation clauses and renewal options. Rent expense for these third-party operating leases was $5.2 million for the fiscal year ended March 30, 2019 and $5.3 million for the fiscal year ended March 31, 2018, and is included in Cost of sales and Selling, general and administrative expenses in the accompanying Consolidated Statements of Comprehensive Income.

Finance Leases