LEASES

12 Months Ended

Jul. 03, 2021

LEASES

As a result of adopting ASC 842 as of June 30, 2019, the Company recognized an right of use asset of $21.4 million, a corresponding lease liability of $20.4 million, a reduction in prepaid rent of $0.4 million, a reduction of favorable lease agreement intangible of $0.7 million, and no adjustment to retained earnings or future P&L impact.

The Company has several commitments under operating leases for warehouses, manufacturing facilities, office buildings, and equipment with initial terms that expire at various dates during the next 1 year to 10 years.

The Company has some operating leases that include an extension clause. Management has considered the likelihood of exercising each extension option included and estimated the duration of the extension option, for those leases management determined to be reasonably certain, in calculating the lease term for measurement of the right of use asset and liability.

For operating leases, management assumed a discount rate of 4% - 5.9%. The weighted average discount rate is disclosed in the tables below.

The components of lease expense were as follows as of July 3, 2021 and June 27, 2020 (in thousands):


		Year Ended		Year Ended
Lease cost	Classification	July 3, 2021		June 27, 2020
Operating lease cost	Cost of sales	$	4,818	$	4,511
Operating lease cost	Selling, general and administrative expenses	1,270		1,266
Total lease cost		$	6,088	$	5,777

Fixed lease cost		$	4,943	$	5,335
Short-term lease cost		$	1,145	$	442
Total lease cost		$	6,088	$	5,777

Amounts reported in the Consolidated Balance Sheet as of July 3, 2021 and June 27, 2020 were (in thousands, except weighted average lease term and discount rate):


	July 3, 2021			June 27, 2020
Operating Leases:
Operating lease right of use assets	$	15,745		$	17,568
Operating lease liabilities (1)	15,653			17,173

Weighted-average remaining lease term (in years)
Operating leases	5.95			6.46

Weighted-average discount rate
Operating leases	4.05		%	4.07		%

(1) For fiscal year 2021 and 2020, the current portion of the total operating lease liabilities is classified under Other Current Liabilities.

Other information related to leases was as follows (in thousands):



	July 3, 2021	June 27, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	4,976	4,237

Future lease payments under non-cancellable leases as of July 3, 2021 are as follows (in thousands):


Fiscal Years Ending	Operating Leases
2022	$	4,225
2023	3,140
2024	2,526
2025	2,427
2026	1,865
Thereafter	4,125
Total undiscounted lease payments	18,308
Less: present value discount	2,655
Total lease liabilities	$	15,653