Leases

9 Months Ended

Sep. 29, 2023

Note 8 – Leases

Finance Leases

The Company entered into finance leases primarily related to purchases of equipment used for manufacturing, computer-related equipment or furniture and fixtures. These finance leases are two to five years in length and have fixed payment amounts for the term of the contract and have options to purchase the assets at the end of the lease term. Supplemental balance sheet information related to finance leases consisted of the following (dollars in thousands):

Note 8 – Leases (Continued)

Finance Leases (Continued)


	September 29, 2023			December 30, 2022
Machinery and equipment	$	—		$	30
Computer equipment and software		6			18
Furniture and fixtures		475			475
Finance lease right-of-use assets, gross		481			523
Less accumulated depreciation		(261	)		(181	)
Finance lease right-of-use assets, net	$	220		$	342

Current finance lease obligations	$	164		$	169
Long-term finance lease obligations		84			210
Total finance lease liability	$	248		$	379
Weighted-average remaining lease term (in years)		1.5			2.2
Weighted-average discount rate		4.23	%		4.10	%

Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):


	Three Months Ended				Nine Months Ended
	September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Amortization of finance lease right-of-use asset	$	37	$	39	$	114	$	121
Interest on finance lease liabilities		3		5		10		13
Cash paid for amounts included in the measurement of finance lease liabilities:
Operating cash flows		3		5		10		13
Financing cash flows		39		40		121		85

Operating Leases

The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to ten years in length with options to extend. The Company does not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands):


	September 29, 2023			December 30, 2022
Machinery and equipment	$	726		$	789
Computer equipment and software		446			446
Real property		41,313			34,465
Operating lease right-of-use assets, gross		42,485			35,700
Less accumulated depreciation		(7,493	)		(5,430	)
Operating lease right-of-use assets, net	$	34,992		$	30,270

Current operating lease obligations	$	4,003		$	3,524
Long-term operating lease obligations		31,643			27,136
Total operating lease liability	$	35,646		$	30,660
Weighted-average remaining lease term (in years)		7.5			7.5
Weighted-average discount rate		5.15	%		3.87	%

Note 8 – Leases (Continued)

Operating Leases (Continued)

Supplemental cash flow information related to operating leases was as follows (dollars in thousands):


	Three Months Ended				Nine Months Ended
	September 29, 2023		September 30, 2022		September 29, 2023		September 30, 2022
Operating lease cost	$	1,419	$	1,167	$	3,883	$	3,471
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows		1,259		1,103		3,584		3,069
Right-of-use assets obtained in exchange for new operating lease liabilities		4,580		126		8,000		1,166

Future Maturities of Lease Liabilities

Estimated future maturities of lease liabilities under operating and finance leases having initial or remaining non-cancelable lease terms more than one year as of September 29, 2023 is as follows (in thousands):


As of September 29, 2023 12 Months Ended	Operating Leases			Finance Leases
September 2024	$	5,957		$	171
September 2025		5,630			85
September 2026		4,987			—
September 2027		5,319			—
September 2028		5,381			—
Thereafter		18,105			—
Total future minimum lease payments	$	45,379		$	256
Less amounts representing interest		(9,733	)		(8	)
Total lease liability	$	35,646		$	248