Leases

3 Months Ended

Apr. 02, 2023

Leases [Abstract]

Leases

LEASES

General

The Company has operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. The Company’s leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

The Company records a right-of-use asset and lease liability for leases extending beyond one year for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of April 2, 2023, there were no significant leases that had not commenced.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of April 2, 2023 and January 1, 2023:

	April 2, 2023				January 1, 2023
Balance Sheet Location	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(in thousands)
Operating lease right-of-use assets	$	80,226			$	81,644
Current portion of operating lease liabilities	$	11,601			$	11,857
Operating lease liabilities	71,325				72,305
Total operating lease liabilities	$	82,926			$	84,162
Property, plant and equipment, net			$	5,838			$	5,845
Accrued expenses			$	2,173			$	2,101
Other long-term liabilities			4,050				4,138
Total finance lease liabilities			$	6,223			$	6,239

Lease Costs

	Three Months Ended
	April 2, 2023		April 3, 2022
	(in thousands)
Finance lease cost:
Amortization of right-of-use assets	$	655	$	517
Interest on lease liabilities	60		29
Operating lease cost	4,703		4,918
Short-term lease cost	356		227
Variable lease cost	733		616
Total lease cost	$	6,507	$	6,307

Other Supplemental Information

	Three Months Ended
	April 2, 2023		April 3, 2022
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	52	$	21
Operating cash flows from operating leases	4,201		4,635
Financing cash flows from finance leases	643		479
Right-of-use assets obtained in exchange for new finance lease liabilities	557		382
Right-of-use assets obtained in exchange for new operating lease liabilities	1,121		20

Lease Term and Discount Rate

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of April 2, 2023 and January 1, 2023:

	April 2, 2023		January 1, 2023
Weighted-average remaining lease term – finance leases (in years)	3.73		3.82
Weighted-average remaining lease term – operating leases (in years)	9.16		9.29
Weighted-average discount rate – finance leases	4.16	%	3.79	%
Weighted-average discount rate – operating leases	5.91	%	5.89	%

Maturity Analysis

A maturity analysis of lease payments under non-cancellable leases is presented as follows:

Fiscal Year	Operating Leases		Finance Leases
	(in thousands)
2023 (excluding the three months ended April 2, 2023)	$	10,792	$	1,761
2024	14,237		2,069
2025	12,463		1,260
2026	12,407		711
2027	10,015		495
Thereafter	49,813		496
Total future minimum lease payments (undiscounted)	109,727		6,792
Less: Present value discount	(26,801)		(569)
Total lease liability	$	82,926	$	6,223

Leases

LEASES

General

The Company has operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. The Company’s leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

The Company records a right-of-use asset and lease liability for leases extending beyond one year for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of April 2, 2023, there were no significant leases that had not commenced.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of April 2, 2023 and January 1, 2023:

	April 2, 2023				January 1, 2023
Balance Sheet Location	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(in thousands)
Operating lease right-of-use assets	$	80,226			$	81,644
Current portion of operating lease liabilities	$	11,601			$	11,857
Operating lease liabilities	71,325				72,305
Total operating lease liabilities	$	82,926			$	84,162
Property, plant and equipment, net			$	5,838			$	5,845
Accrued expenses			$	2,173			$	2,101
Other long-term liabilities			4,050				4,138
Total finance lease liabilities			$	6,223			$	6,239

Lease Costs

	Three Months Ended
	April 2, 2023		April 3, 2022
	(in thousands)
Finance lease cost:
Amortization of right-of-use assets	$	655	$	517
Interest on lease liabilities	60		29
Operating lease cost	4,703		4,918
Short-term lease cost	356		227
Variable lease cost	733		616
Total lease cost	$	6,507	$	6,307

Other Supplemental Information

	Three Months Ended
	April 2, 2023		April 3, 2022
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	52	$	21
Operating cash flows from operating leases	4,201		4,635
Financing cash flows from finance leases	643		479
Right-of-use assets obtained in exchange for new finance lease liabilities	557		382
Right-of-use assets obtained in exchange for new operating lease liabilities	1,121		20

Lease Term and Discount Rate

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of April 2, 2023 and January 1, 2023:

	April 2, 2023		January 1, 2023
Weighted-average remaining lease term – finance leases (in years)	3.73		3.82
Weighted-average remaining lease term – operating leases (in years)	9.16		9.29
Weighted-average discount rate – finance leases	4.16	%	3.79	%
Weighted-average discount rate – operating leases	5.91	%	5.89	%

Maturity Analysis

A maturity analysis of lease payments under non-cancellable leases is presented as follows:

Fiscal Year	Operating Leases		Finance Leases
	(in thousands)
2023 (excluding the three months ended April 2, 2023)	$	10,792	$	1,761
2024	14,237		2,069
2025	12,463		1,260
2026	12,407		711
2027	10,015		495
Thereafter	49,813		496
Total future minimum lease payments (undiscounted)	109,727		6,792
Less: Present value discount	(26,801)		(569)
Total lease liability	$	82,926	$	6,223