Leases

12 Months Ended

Dec. 25, 2021

Leases [Abstract]

Leases

LEASES

COVID-19 Pandemic

In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resulting expected cost and complexity of applying the lease modification requirements in ASC 842, the FASB issued Staff Q&A-Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can then elect to apply or not to apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that will result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

The Company has made this election and, consequently, for such lease concessions, did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts. The Company has accounted for the concessions as if no changes to the lease contract were made and has subsequently increased accounts payable and has continued to recognize expense during the deferral period.

Balance sheet information related to right-of-use assets and liabilities is as follows:

	Balance Sheet Location	December 25, 2021		12/26/2020 (As Adjusted)
Operating Leases:
Operating lease right-of-use assets	Operating lease right-of-use assets	$	22,534	$	21,151
Current portion of operating lease liabilities	Current portion of operating lease liabilities	2,528		3,089
Noncurrent portion of operating lease liabilities	Operating lease liabilities	20,692		18,630
Total operating lease liabilities		$	23,220	$	21,719
Finance Leases:
Finance lease right-of-use assets (1)	Property, plant, and equipment, net	$	10,111	$	14,332
Current portion of finance lease liabilities (1)	Current portion of long-term debt	1,104		2,771
Noncurrent portion of finance lease liabilities (1)	Long-term debt	12,683		14,167
		$	13,787	$	16,938

(1) Includes leases classified as failed sale-leaseback transactions.

Lease cost recognized in the consolidated financial statements is summarized as follows:

	December 25, 2021		December 26, 2020
Operating lease cost	$	4,479	$	4,734
Finance lease cost:
Amortization of lease assets (1)	2,069		3,160
Interest on lease liabilities (1)	1,483		1,702
Total finance lease costs (1)	$	3,552	$	4,862

(1) Includes leases classified as failed sale-leaseback transactions.

Other supplemental information related to leases is summarized as follows:

	December 25, 2021		December 26, 2020
Weighted average remaining lease term (in years):
Operating leases	7.65		7.89
Finance leases (1)	13.82		12.57
Weighted average discount rate:
Operating leases	6.30	%	6.81	%
Finance leases (1)	9.73	%	9.42	%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	4,395		4,568
Operating cash flows from finance leases (1)	1,483		1,702
Financing cash flows from finance leases (1)	3,152		4,756

(1) Includes leases classified as failed sale-leaseback transactions.

The following table summarizes the Company's undiscounted future minimum lease payments under non-cancellable contractual obligations for operating and financing lease liabilities as of year end:

Fiscal Year	Operating Leases	Finance Leases
2022	3,919	2,386
2023	3,708	3,409
2024	3,631	1,045
2025	3,670	1,053
2026	3,707	1,066
Thereafter	11,003	13,918
Total future minimum lease payments (undiscounted)	29,638	22,877
Less: Present value discount	(6,418)	(9,090)
Total lease liability	23,220	13,787

On October 22, 2019, the Company sold its Susan Street facility in Santa Ana, California to CenterPoint Properties Trust. The sale price was $37,195. The gain on the sale transaction was $25,121. The transaction was accounted for as a successful sale-leaseback.

Concurrent with the sale of the Susan Street facility, the Company (by a wholly-owned subsidiary) entered into an operating lease to lease back the property for a term of 10 years with two 5 year renewal options. The initial annual rental is $2,083 increasing at 2% per year for the term of the lease. The lease requires the landlord to make certain required capital improvements, at no further rental increase or charge to the Company. The Company is responsible for normal maintenance of the building and facilities. The Company concurrently executed a lease guaranty, pursuant to which it guaranteed the prompt payment when due of all rent payments to be made under the lease agreement.

Leases

LEASES

COVID-19 Pandemic

In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resulting expected cost and complexity of applying the lease modification requirements in ASC 842, the FASB issued Staff Q&A-Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can then elect to apply or not to apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that will result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

The Company has made this election and, consequently, for such lease concessions, did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts. The Company has accounted for the concessions as if no changes to the lease contract were made and has subsequently increased accounts payable and has continued to recognize expense during the deferral period.

Balance sheet information related to right-of-use assets and liabilities is as follows:

	Balance Sheet Location	December 25, 2021		12/26/2020 (As Adjusted)
Operating Leases:
Operating lease right-of-use assets	Operating lease right-of-use assets	$	22,534	$	21,151
Current portion of operating lease liabilities	Current portion of operating lease liabilities	2,528		3,089
Noncurrent portion of operating lease liabilities	Operating lease liabilities	20,692		18,630
Total operating lease liabilities		$	23,220	$	21,719
Finance Leases:
Finance lease right-of-use assets (1)	Property, plant, and equipment, net	$	10,111	$	14,332
Current portion of finance lease liabilities (1)	Current portion of long-term debt	1,104		2,771
Noncurrent portion of finance lease liabilities (1)	Long-term debt	12,683		14,167
		$	13,787	$	16,938

(1) Includes leases classified as failed sale-leaseback transactions.

Lease cost recognized in the consolidated financial statements is summarized as follows:

	December 25, 2021		December 26, 2020
Operating lease cost	$	4,479	$	4,734
Finance lease cost:
Amortization of lease assets (1)	2,069		3,160
Interest on lease liabilities (1)	1,483		1,702
Total finance lease costs (1)	$	3,552	$	4,862

(1) Includes leases classified as failed sale-leaseback transactions.

Other supplemental information related to leases is summarized as follows:

	December 25, 2021		December 26, 2020
Weighted average remaining lease term (in years):
Operating leases	7.65		7.89
Finance leases (1)	13.82		12.57
Weighted average discount rate:
Operating leases	6.30	%	6.81	%
Finance leases (1)	9.73	%	9.42	%
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	4,395		4,568
Operating cash flows from finance leases (1)	1,483		1,702
Financing cash flows from finance leases (1)	3,152		4,756

(1) Includes leases classified as failed sale-leaseback transactions.

The following table summarizes the Company's undiscounted future minimum lease payments under non-cancellable contractual obligations for operating and financing lease liabilities as of year end:

Fiscal Year	Operating Leases	Finance Leases
2022	3,919	2,386
2023	3,708	3,409
2024	3,631	1,045
2025	3,670	1,053
2026	3,707	1,066
Thereafter	11,003	13,918
Total future minimum lease payments (undiscounted)	29,638	22,877
Less: Present value discount	(6,418)	(9,090)
Total lease liability	23,220	13,787

On October 22, 2019, the Company sold its Susan Street facility in Santa Ana, California to CenterPoint Properties Trust. The sale price was $37,195. The gain on the sale transaction was $25,121. The transaction was accounted for as a successful sale-leaseback.

Concurrent with the sale of the Susan Street facility, the Company (by a wholly-owned subsidiary) entered into an operating lease to lease back the property for a term of 10 years with two 5 year renewal options. The initial annual rental is $2,083 increasing at 2% per year for the term of the lease. The lease requires the landlord to make certain required capital improvements, at no further rental increase or charge to the Company. The Company is responsible for normal maintenance of the building and facilities. The Company concurrently executed a lease guaranty, pursuant to which it guaranteed the prompt payment when due of all rent payments to be made under the lease agreement.