LEASES

3 Months Ended

Dec. 31, 2021

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

As of December 31, 2021, 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 definition of a lease, 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 months ended December 31, 2021 and January 1, 2021 were as follows:


	Three months ended
	December 31, 2021		January 1, 2021
Lease Cost
Operating lease costs	$	2,107	$	2,012
Short-term lease costs	414		391
Variable lease costs	45		46
Total lease cost	$	2,566	$	2,449

Included in the amounts in the table above were rent expense to related parties of $291 and $255 for the three months ended December 31, 2021 and January 1, 2021, respectively.

As of December 31, 2021, 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 December 31, 2021. Supplemental balance sheet, cash flow, and other information related to operating leases was as follows:


	Three months ended
	December 31, 2021			January 1, 2021
Operating leases:

Operating lease ROU assets	$	47,443		$	38,784

Current operating lease liabilities	5,646			6,411
Non-current operating lease liabilities	42,817			33,260
Total operating lease liabilities	$	48,463		$	39,671

Weighted average remaining lease term (in years)	12.15			9.88

Weighted average discount rate	3.09		%	2.84		%

Cash paid for amounts included in the measurement of lease liabilities	$	1,875		$	1,857

Future minimum rental commitments under non-cancelable operating leases with an initial lease term in excess of one year at December 31, 2021 were as follows:


Year	Related parties included in total		Total
Remainder of 2022	$	837	$	6,099
2023	1,143		7,371
2024	1,178		6,696
2025	1,213		6,138
2026	1,250		4,526
Thereafter	209		29,780
Total undiscounted lease payments	5,830		60,610
Less: Imputed interest	(222)		(12,147)
Total net lease liability	$	5,608	$	48,463

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 December 31, 2021, the Company did not have any other additional significant operating lease commitments that have not yet commenced.