Guarantees, Commitments and Contingencies

12 Months Ended

Oct. 02, 2021

Commitments and Contingencies Disclosure [Abstract]

Guarantees, Commitments and Contingencies

10. Guarantees, Commitments and Contingencies

Litigation

At October 2, 2021, the Company had a number of product liability and other cases pending. Management believes that, considering the Company’s insurance coverage and its intention to vigorously defend its positions, the ultimate resolution of these matters will not have a material adverse impact on the Company’s financial statements.

Environmental

The Company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous materials used in its manufacturing processes. Failure by the Company to comply with present and future regulations could subject it to future liabilities. In addition, such regulations could require the Company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. The Company is currently not involved in any material environmental proceedings and therefore management believes that the resolution of environmental matters will not have a material adverse effect on the Company’s financial statements.

Our environmental liability using a discount rate of 9.3%, included in current accrued expenses and other long-term liabilities on the Consolidated Balance Sheets, was $0.2 million and $0.2 million at October 2, 2021 and October 3, 2020, respectively. The estimated aggregate undiscounted amount that will be incurred over the next six years is $0.5 million. At October 2, 2021, the estimated payments for each of the next five years are $0.1 million per year and the aggregate amount thereafter is $0.1 million. Future expenditures may exceed the amounts accrued and estimated.

Guarantees

In the ordinary course of business, we may provide guarantees for certain transactions entered into by our dealers. At October 2, 2021, we had a $3.0 million guarantee outstanding that relates to a guarantee of indebtedness for a term loan with a remaining maturity up to 1.3 years. The $3.0 million represents the estimated maximum amount we would be required to pay upon default of all guaranteed indebtedness, and we believe the likelihood of required performance to be remote. At October 2, 2021, $0.2 million was included in other current liabilities on our Consolidated Balance Sheets for the estimated fair value of the guarantee.

Lease Commitments

We have operating and finance leases for office space, warehouse space, or a combination of both. Our leases have remaining lease terms ranging from 1 year to 6.2 years with the option to extend leases for up to 5.0 years.

The components of lease costs included on the Consolidated Statements of Operations are as follows:


(in thousands)		Fiscal Years Ended
Lease cost	Classification	2021		2020
Operating leases	Selling, general and administrative expenses	$	1,149	$	1,440
Finance leases
Amortization of lease assets	Cost of goods sold	1,497		1,168
Interest on lease liabilities	Interest expense	241		238
Short-term leases (1)	Cost of goods sold or selling, general and administrative expenses	487		1,390
Total lease cost		$	3,374	$	4,236

(1) Short-term lease cost includes both leases and rentals with initial terms of one year or less. Classification depends on the purpose of the underlying lease.

The following table summarizes the lease amounts included on the Consolidated Balance Sheets as follows:


(in thousands)	Balance Sheet Location	October 2, 2021		October 3, 2020
Assets
Operating	Property, plant and equipment	$	5,152	$	5,857
Finance (1)	Finance lease right-of-use	5,486		6,983
Total lease assets		$	10,638	$	12,840

Liabilities
Current
Operating	Other current liabilities	$	1,158	$	1,060
Finance	Finance lease obligations	1,327		1,280
Long-term
Operating	Other liabilities	5,529		6,651
Finance	Finance lease obligations	4,538		5,879
Total lease liabilities		$	12,552	$	14,870

(1) Net of accumulated amortization of $2.8 million and $1.3 million, respectively.

The operating leases recorded do not assume renewal based on our analysis of those leases and their contractual terms. One of our finance leases assumes renewal based on our expectations with regard to the lease and the contractual terms.

Lease liability maturities are presented in the following table:


(in thousands)	October 2, 2021
Fiscal Years Ended	Operating		Finance		Total
2022	$	1,437	$	1,530	$	2,967
2023	1,427		1,530		2,957
2024	1,444		1,530		2,974
2025	1,456		1,742		3,198
2026	1,097		—		1,097
Thereafter	685		—		685
Total future minimum lease payments	7,546		6,332		13,878
Less: imputed interest	859		467		1,326
Total lease liabilities	$	6,687	$	5,865	$	12,552

Lease terms and discount rates are presented in the following table:

October 2, 2021

Operating

Finance

Weighted average remaining lease term

5.3 years

3.6 years

Weighted average discount rate

4.6

3.8

Supplemental cash flow information is presented in the following table:


	Fiscal Years Ended
(in thousands)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows - operating leases	$	1,394	$	1,711
Operating cash flows - finance leases	241		238
Financing cash flows - finance leases	1,294		945
Right-of-use assets exchanged for lease liabilities
Operating leases	$	62	$	—
Finance leases	—		3,496

Purchase Commitments

In the ordinary course of business, the Company enters into short-term contractual purchase orders for manufacturing inventory and capital assets. The amount of these commitments is expected to be as follows:


(in thousands)
Fiscal Years Ended	Amount
2022	$	58,579
2023	69




Total purchase commitments	$	58,648