LEASES

12 Months Ended

Jul. 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 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%. The weighted average discount rate is disclosed in the tables below.

The components of lease cost were as follows as of July 1, 2023 and July 2, 2022 (in thousands):

		Year Ended		Year Ended
Lease cost	Classification	July 1, 2023		July 2, 2022
Operating lease cost	Cost of sales	$	4,519	$	6,442
Operating lease cost	Selling, general and administrative expenses	737		929
Financing lease cost	Cost of sales	$	3,891	$	2,054
Financing lease cost	Selling, general and administrative expenses	$	161	$	64
Total lease cost		$	9,308	$	9,489
Fixed lease cost		$	8,171	$	7,941
Short-term lease cost		$	1,137	$	1,548
Total lease cost		$	9,308	$	9,489

Amounts reported in the Consolidated Balance Sheet as of July 1, 2023 and July 2, 2022 were (in thousands, except weighted average lease term and discount rate):

	July 1, 2023			July 2, 2022
Operating Leases:
Operating lease right of use assets	$	16,202		$	16,731
Operating lease liabilities (1)	16,202			16,731
Weighted-average remaining lease term (in years)
Operating leases	4.55			5.28
Weighted-average discount rate
Operating leases	4.00		%	4.00		%
Financing Leases (2):
Financing lease right of use assets	$	9,718		$	12,464
Financing lease liabilities	8,278			11,211
Weighted-average remaining lease term (in years)
Financing leases	1.89			2.56
Weighted-average discount rate
Financing leases	9.96		%	8.82		%

(1) For fiscal year 2023 and 2022, the current portion of the total operating lease liabilities is classified under Other Current Liabilities.

(2) The total finance lease right of use assets of $9.7 million is classified under Other Long-term Assets. The current portion of the total finance lease liabilities of $4.7 million is classified under Current portion of debt, net, resulting in $3.6 million classified in Other Long-term Liabilities section of the condensed consolidated balance sheet.

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

	July 1, 2023	July 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	5,714	4,261
Financing cash flows used in financing leases	4,291	2,331

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

Fiscal Years Ending	Operating Leases		Finance Leases
2024	$	5,134	$	4,711
2025	3,987		3,290
2026	3,365		670
2027	2,464		71
2028	1,551		—
Thereafter	1,689		—
Total undiscounted lease payments	18,190		8,742
Less: present value discount	1,988		464
Total lease liabilities	$	16,202	$	8,278

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 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%. The weighted average discount rate is disclosed in the tables below.

The components of lease cost were as follows as of July 1, 2023 and July 2, 2022 (in thousands):

		Year Ended		Year Ended
Lease cost	Classification	July 1, 2023		July 2, 2022
Operating lease cost	Cost of sales	$	4,519	$	6,442
Operating lease cost	Selling, general and administrative expenses	737		929
Financing lease cost	Cost of sales	$	3,891	$	2,054
Financing lease cost	Selling, general and administrative expenses	$	161	$	64
Total lease cost		$	9,308	$	9,489
Fixed lease cost		$	8,171	$	7,941
Short-term lease cost		$	1,137	$	1,548
Total lease cost		$	9,308	$	9,489

Amounts reported in the Consolidated Balance Sheet as of July 1, 2023 and July 2, 2022 were (in thousands, except weighted average lease term and discount rate):

	July 1, 2023			July 2, 2022
Operating Leases:
Operating lease right of use assets	$	16,202		$	16,731
Operating lease liabilities (1)	16,202			16,731
Weighted-average remaining lease term (in years)
Operating leases	4.55			5.28
Weighted-average discount rate
Operating leases	4.00		%	4.00		%
Financing Leases (2):
Financing lease right of use assets	$	9,718		$	12,464
Financing lease liabilities	8,278			11,211
Weighted-average remaining lease term (in years)
Financing leases	1.89			2.56
Weighted-average discount rate
Financing leases	9.96		%	8.82		%

(1) For fiscal year 2023 and 2022, the current portion of the total operating lease liabilities is classified under Other Current Liabilities.

(2) The total finance lease right of use assets of $9.7 million is classified under Other Long-term Assets. The current portion of the total finance lease liabilities of $4.7 million is classified under Current portion of debt, net, resulting in $3.6 million classified in Other Long-term Liabilities section of the condensed consolidated balance sheet.

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

	July 1, 2023	July 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	5,714	4,261
Financing cash flows used in financing leases	4,291	2,331

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

Fiscal Years Ending	Operating Leases		Finance Leases
2024	$	5,134	$	4,711
2025	3,987		3,290
2026	3,365		670
2027	2,464		71
2028	1,551		—
Thereafter	1,689		—
Total undiscounted lease payments	18,190		8,742
Less: present value discount	1,988		464
Total lease liabilities	$	16,202	$	8,278