We lease warehouse space, equipment used in the transportation of goods in our warehouses and a limited number of automobiles and trailers. Our leases generally do not contain any explicit guarantees of residual value and, with the exception of our warehousing and distribution center in Huntley, IL, generally do not contain non-lease components. Our leases for warehouse transportation equipment generally require the equipment to be returned to the lessor in good working order.

Through a review of our contracts, we determine if an arrangement is a lease at inception and analyze the lease to determine if it is operating or finance. Operating lease right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental collateralized borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Implicit rates are used when readily determinable. With the exception of our warehouse leases, none of our other leases currently contain options to extend the term. In the event of an option to extend the term of a lease, the lease term used in measuring the liability would include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the respective lease term. Our leases have remaining terms of up to 6.8 years.

It is our accounting policy not to apply lease recognition requirements to short-term leases, defined as leases with an initial term of 12 months or less. As such, leases with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets. We have also made the policy election to not separate lease and non-lease components for all leases.

The following table provides supplemental information related to operating lease right-of-use assets and liabilities:


	March 27, 2025		June 27, 2024		March 28, 2024		Affected Line Item in Consolidated Balance Sheets
Assets
Operating lease right-of-use assets	$	28,871	$	27,404	$	7,409	Operating lease right-of-use assets
Total lease right-of-use assets	$	28,871	$	27,404	$	7,409

Liabilities
Current:
Operating leases	$	4,537	$	2,623	$	1,872	Other accrued expenses
Noncurrent:
Operating leases		25,304		24,877		5,553	Long-term operating lease liabilities
Total lease liabilities	$	29,841	$	27,500	$	7,425

The following tables summarize the Company’s total lease costs and other information arising from operating lease transactions:


	For the Quarter Ended				For the Thirty-Nine Weeks Ended
	March 27, 2025		March 28, 2024		March 27, 2025		March 28, 2024
Operating lease costs (a)	$	1,833	$	847	$	5,546	$	2,236
Variable lease costs (b)		627		34		933		(107	)
Total lease cost	$	2,460	$	881	$	6,479	$	2,129

(a)

Includes short-term leases which are immaterial.

(b)

Variable lease costs consist of property taxes, sales tax, insurance and lease overtime charges.

Supplemental cash flow and other information related to leases was as follows:


	For the Thirty-Nine Weeks Ended
	March 27, 2025		March 28, 2024
Operating cash flows information:
Cash paid for amounts included in measurements for lease liabilities	$	4,166	$	1,827

Non-cash activity:
Right-of-use assets obtained in exchange for new operating lease obligations	$	4,812	$	2,350


	March 27, 2025			June 27, 2024			March 28, 2024
Weighted average remaining lease term (in years)		5.9			6.6			4.2
Weighted average discount rate		6.7	%		6.8	%		6.9	%

Maturities of operating lease liabilities as of March 27, 2025 are as follows:


Fiscal Year Ending
June 26, 2025 (excluding the thirty-nine weeks ended March 27, 2025)	$	1,795
June 25, 2026		6,183
June 24, 2027		6,261
June 29, 2028		6,115
June 28, 2029		5,198
June 27, 2030		4,237
Thereafter		6,479
Total lease payments		36,268
Less imputed interest		(6,427	)
Present value of operating lease liabilities	$	29,841

At March 27, 2025, the Company has additional operating leases of approximately $116 that have not yet commenced and therefore are not reflected in the Consolidated Balance Sheet and tables above. The leases are scheduled to commence in the fourth quarter of fiscal 2025 with initial lease terms ranging from 5 to 6 years.

We lease office space in our four-story office building located in Elgin, IL. As a lessor, we retain substantially all of the risks and benefits of ownership of the investment property and under Topic 842: Leases we continue to account for all of our leases as operating leases. Lease agreements may include options to renew. We accrue fixed lease income on a straight‑line basis over the terms of the leases. There is generally no variable lease consideration and an immaterial amount of non-lease components such as recurring utility and storage fees. Leases between related parties are immaterial.

Leasing revenue is as follows:


	For the Quarter Ended				For the Thirty-Nine Weeks Ended
	March 27, 2025		March 28, 2024		March 27, 2025		March 28, 2024
Lease income related to lease payments	$	228	$	490	$	1,185	$	1,467

The future minimum, undiscounted fixed cash flows under non-cancelable tenant operating leases for each of the next five years and thereafter are as follows:


Fiscal Year Ending
June 26, 2025 (excluding the thirty-nine weeks ended March 27, 2025)	$	249
June 25, 2026		1,151
June 24, 2027		1,168
June 29, 2028		582
June 28, 2029		531
June 27, 2030		544
Thereafter		2,328
	$	6,553

Note 3 – Leases