LEASES

6 Months Ended

Apr. 01, 2022

The Company leases certain facilities and machinery and equipment under long-term, non-cancelable operating leases. The Company determines if an arrangement is a lease at inception.

As of April 1, 2022, the Company had approximately 200 leases, with remaining terms ranging from less than one year to 18 years. Some of the leases contain variable payment terms, such as payments based on fluctuations in the Consumer Price Index (CPI). Some leases also contain options to extend or terminate the lease. To the extent the Company is reasonably certain to exercise these options, they have been considered in the calculation of the right-of-use ("ROU") assets and lease liabilities. Under current lease agreements, there are no residual value guarantees or restrictive lease covenants. In calculating the ROU assets and lease liabilities, several assumptions and judgments were made by the Company, including whether a contract is or contains a lease under the applicable definition, and the determination of the discount rate, which is assumed to be the incremental borrowing rate. The incremental borrowing rate is derived from information available to the Company at the lease commencement date based on lease length and location.

The components of lease expense recognized in the accompanying Condensed Consolidated Statements of Operations for the three and six months ended April 1, 2022 and April 2, 2021 were as follows:


	Three months ended				Six months ended
	April 1, 2022		April 2, 2021		April 1, 2022		April 2, 2021
Lease Cost
Operating lease costs	$	2,111	$	2,290	$	4,218	$	4,077
Short-term lease costs	545		329		959		803
Variable lease costs	43		49		88		92
Total lease cost	$	2,699	$	2,668	$	5,265	$	4,972

Included in the amounts in the table above were rent expense to related parties of $290 and $581 for the three and six months ended April 1, 2022, respectively, and $261 and $516 for the three and six months ended April 2, 2021, respectively.

As of April 1, 2022, the Company did not have any finance leases or sublease agreements. Additionally, the Company does not have any leases in which it is the lessor. While the Company extended or renewed various existing leases during the quarter, there were no significant new leases entered into during the quarter ended April 1, 2022. Supplemental balance sheet, cash flow, and other information related to operating leases was as follows:


	Six months ended
	April 1, 2022			April 2, 2021
Operating leases:

Operating lease ROU assets	$	47,225		$	43,489

Current operating lease liabilities	6,080			5,715
Non-current operating lease liabilities	42,233			38,670
Total operating lease liabilities	$	48,313		$	44,385

Weighted average remaining lease term (in years)	11.86			13.53

Weighted average discount rate	3.09		%	3.16		%

Cash paid for amounts included in the measurement of lease liabilities	$	3,739		$	3,757

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at April 1, 2022 were as follows:


Year	Related parties included in total		Total
Remainder of 2022	$	594	$	4,106
2023	1,233		7,577
2024	1,270		6,795
2025	1,307		6,211
2026	1,347		4,609
Thereafter	226		29,767
Total undiscounted lease payments	5,977		59,065
Less: Imputed interest	(229)		(10,752)
Total net lease liability	$	5,748	$	48,313

During the second quarter of fiscal 2021, the Company amended its agreement with the landlord on an existing leased facility. Payments under the amended agreement are expected to begin in fiscal year 2022 and go through June 2039, and total estimated rental payments, not included in the amounts above, will be approximately $14 million over the course of the lease as amended. As of April 1, 2022, the Company did not have any other additional significant operating lease commitments that have not yet commenced.