Leases

9 Months Ended

Mar. 30, 2024

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 4.25%. The weighted average discount rate is disclosed in the tables below.

The components of lease cost for the three months and nine months ended March 30, 2024 and were (in thousands): 

		Three Months Ended				Nine Months Ended
		March 30, 2024		April 1, 2023		March 30, 2024		April 1, 2023
Lease cost	Classification
Operating lease cost	Cost of sales	$	1,199	$	962	$	3,548	$	3,402
Operating lease cost	Selling, general and administrative expenses	$	184	$	187	$	551	$	554
Financing lease cost	Cost of sales	$	1,129	$	1,062	$	3,594	$	2,922
Financing lease cost	Selling, general and administrative expenses	$	51	$	40	$	155	$	117
Total lease cost		$	2,563	$	2,251	$	7,848	$	6,995
Fixed lease cost		$	1,331	$	1,956	$	4,657	$	6,156
Short-term lease cost		$	1,232	$	295	$	3,191	$	839
Total lease cost		$	2,563	$	2,251	$	7,848	$	6,995

Amounts reported in the Consolidated Balance Sheet as of March 30, 2024 were (in thousands, except weighted average lease term and discount rate):

	March 30, 2024		July 1, 2023
Operating Leases:
Operating lease right of use assets	$	16,790	$	16,202
Operating lease liabilities (1)	$	16,790	$	16,202
Weighted-average remaining lease term (in years)
Operating leases	4.25		4.55
Weighted-average discount rate
Operating leases	4.25%		4.00%
Financing Leases (2):
Financing lease right of use assets	$	4,610	$	9,718
Financing lease liabilities	$	3,170	$	8,278
Weighted-average remaining lease term (in years)
Financing leases	1.23		1.89
Weighted-average discount rate
Financing leases	10.88%		9.96%

(1) The current portion of the total operating lease liabilities of $5.4 million is classified under Other Current Liabilities, resulting in $11.4 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 $4.6 million is classified under Other Long-term Assets. The current portion of the total finance lease liabilities of $2.8 million is classified under Current portion of debt, net, resulting in $0.3 million classified in Other Long-term Liabilities section of the condensed consolidated balance sheet.

Future lease payments under non-cancellable leases as of March 30, 2024 are as follows (in thousands):

Fiscal Years Ending	Operating Leases		Finance Leases
2024 (1)	$	1,529	$	1,112
2025	$	5,104	$	1,909
2026	$	4,147	$	501
2027	$	3,238	$	—
2028	$	2,281	$	—
Thereafter	$	1,873	$	—
Total undiscounted lease payments	$	18,172	$	3,522
Less: present value discount	$	(1,382)	$	(352)
Total lease liabilities	$	16,790	$	3,170

(1) Represents estimated lease payments for the remaining three-month period ending June 29, 2024.

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 4.25%. The weighted average discount rate is disclosed in the tables below.

The components of lease cost for the three months and nine months ended March 30, 2024 and were (in thousands): 

		Three Months Ended				Nine Months Ended
		March 30, 2024		April 1, 2023		March 30, 2024		April 1, 2023
Lease cost	Classification
Operating lease cost	Cost of sales	$	1,199	$	962	$	3,548	$	3,402
Operating lease cost	Selling, general and administrative expenses	$	184	$	187	$	551	$	554
Financing lease cost	Cost of sales	$	1,129	$	1,062	$	3,594	$	2,922
Financing lease cost	Selling, general and administrative expenses	$	51	$	40	$	155	$	117
Total lease cost		$	2,563	$	2,251	$	7,848	$	6,995
Fixed lease cost		$	1,331	$	1,956	$	4,657	$	6,156
Short-term lease cost		$	1,232	$	295	$	3,191	$	839
Total lease cost		$	2,563	$	2,251	$	7,848	$	6,995

Amounts reported in the Consolidated Balance Sheet as of March 30, 2024 were (in thousands, except weighted average lease term and discount rate):

	March 30, 2024		July 1, 2023
Operating Leases:
Operating lease right of use assets	$	16,790	$	16,202
Operating lease liabilities (1)	$	16,790	$	16,202
Weighted-average remaining lease term (in years)
Operating leases	4.25		4.55
Weighted-average discount rate
Operating leases	4.25%		4.00%
Financing Leases (2):
Financing lease right of use assets	$	4,610	$	9,718
Financing lease liabilities	$	3,170	$	8,278
Weighted-average remaining lease term (in years)
Financing leases	1.23		1.89
Weighted-average discount rate
Financing leases	10.88%		9.96%

(1) The current portion of the total operating lease liabilities of $5.4 million is classified under Other Current Liabilities, resulting in $11.4 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 $4.6 million is classified under Other Long-term Assets. The current portion of the total finance lease liabilities of $2.8 million is classified under Current portion of debt, net, resulting in $0.3 million classified in Other Long-term Liabilities section of the condensed consolidated balance sheet.

Future lease payments under non-cancellable leases as of March 30, 2024 are as follows (in thousands):

Fiscal Years Ending	Operating Leases		Finance Leases
2024 (1)	$	1,529	$	1,112
2025	$	5,104	$	1,909
2026	$	4,147	$	501
2027	$	3,238	$	—
2028	$	2,281	$	—
Thereafter	$	1,873	$	—
Total undiscounted lease payments	$	18,172	$	3,522
Less: present value discount	$	(1,382)	$	(352)
Total lease liabilities	$	16,790	$	3,170

(1) Represents estimated lease payments for the remaining three-month period ending June 29, 2024.