XML 27 R16.htm IDEA: XBRL DOCUMENT

Note I - Leases

9 Months Ended

Oct. 03, 2021

NOTE I – LEASES

The Company accounts for leases under ASC Topic 842, Leases. The Company’s leasing activities include roles as both lessee and lessor. As lessee, the Company’s primary leasing activities include buildings and structures to support its manufacturing operations at one location in its Defense segment, and warehouse space and equipment to support its distribution center operations in its Housewares/Small Appliances segment. As lessor, the Company’s primary leasing activity is comprised of manufacturing and office space located adjacent to its corporate offices. All of the Company’s leases are classified as operating leases.

The Company’s leases as lessee in its Defense segment provide for variable lease payments that are based on changes in the Consumer Price Index. As lessor, the Company’s primary lease also provides for variable lease payments that are based on changes in the Consumer Price Index, as well as on increases in costs of insurance, real estate taxes, and utilities related to the leased space. Generally, all of the Company’s lease contracts include options for extensions and early terminations. The majority of lease terms of the Company’s lease contracts recognized on the balance sheet reflect extension options, while none reflect early termination options.

The Company has determined that the rates implicit in its leases are not readily determinable and therefore, estimates its incremental borrowing rates utilizing quotes from financial institutions for real estate and equipment, as applicable, over periods of time similar to the terms of its leases. The Company has entered into various short-term (12 months or less) leases as lessee and has elected a non-recognition accounting policy, as permitted by ASC Topic 842.

	*3 Months Ending*		*3 Months Ending*		*9 Months Ending*		*9 Months Ending*
Summary of Lease Cost (in thousands)	*October 3, 2021*		*September 27, 2020*		*October 3, 2021*		*September 27, 2020*
Operating lease cost	$	254	$	183	$	688	$	544
Short-term and variable lease cost		46		131		206		337
Total lease cost	$	300	$	314	$	894	$	881

Operating cash used for operating leases was $300,000 and $894,000 for the three and nine months ended October 3, 2021, respectively. The weighted-average remaining lease term was 22.7 years, and the weighted-average discount rate was 4.6% as of October 3, 2021.

Maturities of operating lease liabilities are as follows:

Years ending December 31:	*(In thousands)*
2021 (remaining three months)	$	196
2022		805
2023		679
2024		629
2025		621
Thereafter		14,631
Total lease payments	$	17,561
Less: future interest expense		7,284
Lease liabilities	$	10,277

Lease income from operating lease payments was $464,000 and $463,000 for the quarters ended October 3, 2021 and September 27, 2020, respectively and $1,392,000 and $1,389,000 for the nine month periods then ended, respectively. Undiscounted cash flows provided by lease payments are expected as follows:

Years ending December 31:	*(In thousands)*
2021 (remaining three months)	$	464
2022		1,843
2023		1,837
2024		1,837
2025		1,837
Thereafter		14,696
Total lease payments	$	22,514

The Company considers risk associated with the residual value of its leased real property to be low, given the nature of the long-term lease agreement, the Company’s ability to control the maintenance of the property, and the creditworthiness of the lessee. The residual value risk is further mitigated by the long-lived nature of the property, and the propensity of such assets to hold their value or, in some cases, appreciate in value.