Note N - Lease Liabilities

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

N. Lease Liabilities

The Company leases certain office and warehouse space, as well as production and office equipment.

The Company determines if an arrangement is a lease at contract inception. The lease term begins upon lease commencement, which is when the Company takes possession of the asset and may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised. As its lease agreements typically do not provide an implicit rate, the Company primarily uses an incremental borrowing rate based upon the information available at lease commencement. In determining the incremental borrowing rate, the Company considers its current borrowing rate, the term of the lease, and the economic environments where the lease activity is concentrated.

The components of lease expense were as follows:

	For the Quarter Ended						For the Three Quarters Ended
	March 31, 2023			March 25, 2022			March 31, 2023			March 25, 2022
Finance lease cost:
Amortization of right-of-use assets	$	187		$	162		$	498		$	492
Interest on lease liabilities		87			68			219			211
Operating lease cost		852			800			2,250			2,190
Short-term lease cost		2			13			5			53
Variable lease cost		94			46			202			127
Total lease cost		1,222			1,089			3,174			3,073
Less: Sublease income		(18	)		(19	)		(53	)		(57	)
Net lease cost	$	1,204		$	1,070		$	3,121		$	3,016

Other information related to leases was as follows:

	For the Quarter Ended				For the Three Quarters Ended
	March 31, 2023		March 25, 2022		March 31, 2023			March 25, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	873	$	808	$	2,268		$	2,281
Operating cash flows from finance leases		138		207		270			623
Financing cash flows from finance leases		73		68		231			726
Right-of-use-assets obtained in exchange for lease obligations:
Operating leases		218		695		1,736			1,091
Finance leases		47		-		367			307
Weighted average remaining lease term (years):
Operating leases						8.8			8.8
Finance lease						11.3			11.4
Weighted average discount rate:
Operating leases						7.2	%		7.1	%
Finance leases						5.2	%		5.1	%

Approximate future minimum rental commitments under non-cancellable leases as of March 31, 2023 were as follows:      

	Operating Leases			Finance Leases
2023	$	764		$	233
2024		2,607			900
2025		1,708			661
2026		1,484			593
2027		1,438			527
Thereafter		7,701			3,598
Total future lease payments		15,702			6,512
Less: Amount representing interest		(3,269	)		(1,338	)
Present value of future payments	$	12,434		$	5,175

The following table provides a summary of leases recorded on the condensed consolidated balance sheet.

	Balance Sheet Location	March 31, 2023		June 30, 2022
Lease Assets
Operating lease right-of-use assets	Right-of-use assets operating leases	$	12,415	$	12,685
Finance lease right-of-use assets	Property, plant and equipment, net		4,675		4,805
Lease Liabilities
Operating lease liabilities	Accrued liabilities	$	2,537	$	2,127
Operating lease liabilities	Lease obligations		9,897		10,575
Finance lease liabilities	Accrued liabilities		627		576
Finance lease liabilities	Other long-term liabilities		4,548		4,440