Note 10 - Leases and Commitments

12 Months Ended

Feb. 26, 2023

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

10. LEASES AND COMMITMENTS

The Company has operating leases related to land, office space, warehouse space and equipment. All of the Company’s leases have been assessed to be operating leases. Renewal options are included in the lease terms to the extent the Company is reasonably certain to exercise the option. The exercise of lease renewal options is at the Company’s sole discretion. The amounts disclosed in our consolidated balance sheet as of February 26, 2023, pertaining to the right-of-use assets and lease liabilities, are measured on our current expectations of exercising our available renewal options. The incremental borrowing rate represents the Company’s ability to borrow on a collateralized basis over a term similar to the lease term. The leases typically contain renewal options for periods ranging from one year to 10 years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is 2068 assuming exercise of all applicable renewal options by the Company. The Company’s existing leases are not subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing or exercise its available renewal options.

Future minimum lease payments under non-cancellable operating leases as of February 26, 2023 are as follows:

Fiscal Year:
2024	$	53
2025		36
2026		-
2027		-
2028		-
Thereafter		162
Total undiscounted operating lease payments		251
Less imputed interest		(69	)
Present value of operating lease payments	$	182

The above payment schedule includes renewal options that the Company is reasonably likely to exercise. Leases with an initial term of 12 months or less are not recorded on the Company’s balance sheet. The Company recognizes lease expense for leases on a straight-line basis over the terms of the leases.

During the 2023 fiscal year, the Company’s operating lease expense was $62. Cash payments of $53, pertaining to operating leases, are reflected in the consolidated cash flow statement under cash flows from operating activities.

The following table sets forth the right-of-use assets and operating lease liabilities as of February 26, 2023:

Operating right-of-use assets	$	150
Operating lease liabilities	$	53
Long-term operating lease liabilities		129
Total operating lease liabilities	$	182

The Company’s weighted average remaining lease term for its operating leases is 7.54 years.  The Company’s weighted average borrowing rate for its operating leases is 4.46%.

These non-cancelable leases have the following payment schedule:

Fiscal Year	Amount
2024	$	36
2025		-
2026		-
2027		-
2028		-
Thereafter		-
	$	36

The above payment schedule does not include renewal options that have not been committed to. An additional $53 would be included in the period 2024 to 2025 if the Company included renewal periods that the Company deems likely to renew.

Rental expenses, inclusive of real estate taxes and other costs, were $242, $267 and $328 for the 2023, 2022 and 2021 fiscal years, respectively.

In December 2018, the Company entered into a Development Agreement with the City of Newton, Kansas and the Board of County Commissioners of Harvey County, Kansas. Pursuant to this agreement, the Company agreed to construct and operate a redundant manufacturing facility of approximately 90,000 square feet for the design, development and manufacture of advanced composite materials and parts, structures and assemblies for aerospace. The Company further agreed to equip the facility through the purchase of machinery, equipment and furnishings and to create additional new full-time employment of specified levels during a five-year period. In exchange for these agreements, the City and the County agreed to lease to the Company three acres of land at the Newton, Kansas Airport, in addition to the eight acres previously leased to the Company by the City and County. The City and County further agreed to provide financial and other assistance toward the construction of the additional facility as set forth in the Development Agreement. The total cost of the additional facility was approximately $19.8 million, and the expansion is complete. As of February 26, 2023, the Company had $99in equipment purchase obligations.