Leases

9 Months Ended

Apr. 01, 2023

Leases [Abstract]

Leases

Leases

The Company has several commitments under operating and financing 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 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 reasonable 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%. The weighted average discount rate is disclosed in the tables below.

The components of lease cost for the three months and nine months ended April 1, 2023 were (in thousands): 

		Three Months Ended				Nine Months Ended
		April 1, 2023		April 2, 2022		April 1, 2023		April 2, 2022
Lease cost	Classification
Operating lease cost	Cost of sales	$	962	$	1,645	$	3,402	$	4,676
Operating lease cost	Selling, general and administrative expenses	$	187	$	184	554		742
Financing lease cost	Cost of sales	$	1,062	$	271	$	2,922	$	1,322
Financing lease cost	Selling, general and administrative expenses	$	40	$	7	$	117	$	34
Total lease cost		$	2,251	$	2,107	$	6,995	$	6,774
Fixed lease cost		$	1,956	$	1,717	$	6,156	$	5,575
Short-term lease cost		$	295	$	390	$	839	$	1,199
Total lease cost		$	2,251	$	2,107	$	6,995	$	6,774

Amounts reported in the Consolidated Balance Sheet as of April 1, 2023 were (in thousands, except weighted average lease term and discount rate):

	April 1, 2023			July 2, 2022
Operating Leases:
Operating lease right of use assets	$	17,471		$	16,731
Operating lease liabilities (1)	$	17,471		$	16,731
Weighted-average remaining lease term (in years)
Operating leases	4.68			5.28
Weighted-average discount rate
Operating leases	4.0		%	4.0		%
Financing Leases (2):
Financing lease right of use assets	$	13,441		$	12,464
Financing lease liabilities	$	12,113		$	11,211
Weighted-average remaining lease term (in years)
Financing leases	3.19			2.56
Weighted-average discount rate
Financing leases	8.4		%	8.8		%

(1) The current portion of the total operating lease liabilities of $5.4 million is classified under Other Current Liabilities, resulting in $12.1 million classified under Operating Lease Liabilities in the Long-term Liabilities section of the condensed consolidated balance sheet.

(2) The total finance lease right of use assets of $13.4 million is classified under Other Long-term Assets. The current portion of the total finance lease liabilities of $5.4 million is classified under Current portion of debt, net, resulting in $6.8 million classified in Other Long-term Liabilities section of the condensed consolidated balance sheet.

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

	Nine Months Ended
	April 1, 2023		April 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,412	$	3,154
Financing cash flows used in financing leases	$	3,075	$	2,561

Future lease payments under non-cancellable leases as of April 1, 2023 are as follows (in thousands):

Fiscal Years Ending	Operating Leases		Finance Leases
2023 (1)	$	1,468	$	1,528
2024	5,100		4,859
2025	3,987		3,438
2026	3,365		1,006
2027	2,464		970
Thereafter	3,240		1,378
Total undiscounted lease payments	19,624		13,179
Less: present value discount	(2,153)		(1,066)
Total lease liabilities	$	17,471	$	12,113

(1) Represents estimated lease payments for the remaining three-month period ending July 1, 2023.

Leases

Leases

The Company has several commitments under operating and financing 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 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 reasonable 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%. The weighted average discount rate is disclosed in the tables below.

The components of lease cost for the three months and nine months ended April 1, 2023 were (in thousands): 

		Three Months Ended				Nine Months Ended
		April 1, 2023		April 2, 2022		April 1, 2023		April 2, 2022
Lease cost	Classification
Operating lease cost	Cost of sales	$	962	$	1,645	$	3,402	$	4,676
Operating lease cost	Selling, general and administrative expenses	$	187	$	184	554		742
Financing lease cost	Cost of sales	$	1,062	$	271	$	2,922	$	1,322
Financing lease cost	Selling, general and administrative expenses	$	40	$	7	$	117	$	34
Total lease cost		$	2,251	$	2,107	$	6,995	$	6,774
Fixed lease cost		$	1,956	$	1,717	$	6,156	$	5,575
Short-term lease cost		$	295	$	390	$	839	$	1,199
Total lease cost		$	2,251	$	2,107	$	6,995	$	6,774

Amounts reported in the Consolidated Balance Sheet as of April 1, 2023 were (in thousands, except weighted average lease term and discount rate):

	April 1, 2023			July 2, 2022
Operating Leases:
Operating lease right of use assets	$	17,471		$	16,731
Operating lease liabilities (1)	$	17,471		$	16,731
Weighted-average remaining lease term (in years)
Operating leases	4.68			5.28
Weighted-average discount rate
Operating leases	4.0		%	4.0		%
Financing Leases (2):
Financing lease right of use assets	$	13,441		$	12,464
Financing lease liabilities	$	12,113		$	11,211
Weighted-average remaining lease term (in years)
Financing leases	3.19			2.56
Weighted-average discount rate
Financing leases	8.4		%	8.8		%

(1) The current portion of the total operating lease liabilities of $5.4 million is classified under Other Current Liabilities, resulting in $12.1 million classified under Operating Lease Liabilities in the Long-term Liabilities section of the condensed consolidated balance sheet.

(2) The total finance lease right of use assets of $13.4 million is classified under Other Long-term Assets. The current portion of the total finance lease liabilities of $5.4 million is classified under Current portion of debt, net, resulting in $6.8 million classified in Other Long-term Liabilities section of the condensed consolidated balance sheet.

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

	Nine Months Ended
	April 1, 2023		April 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,412	$	3,154
Financing cash flows used in financing leases	$	3,075	$	2,561

Future lease payments under non-cancellable leases as of April 1, 2023 are as follows (in thousands):

Fiscal Years Ending	Operating Leases		Finance Leases
2023 (1)	$	1,468	$	1,528
2024	5,100		4,859
2025	3,987		3,438
2026	3,365		1,006
2027	2,464		970
Thereafter	3,240		1,378
Total undiscounted lease payments	19,624		13,179
Less: present value discount	(2,153)		(1,066)
Total lease liabilities	$	17,471	$	12,113

(1) Represents estimated lease payments for the remaining three-month period ending July 1, 2023.