Note

16.

Leases

The Company currently leases plants, warehouses, offices, store facilities, and equipment under various leases through fiscal

2034.

Most lease agreements are of a long-term nature (over a year), although the Company does also enter into short-term leases, primarily for seasonal needs. Lease agreements

may

contain renewal options and rent escalation clauses and require the Company to pay real estate taxes, insurance, common area maintenance and operating expenses applicable to the leased properties. The Company accounts for its leases in accordance with ASC

842.

At contract inception, we determine whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time, by assessing whether we have the right to obtain substantially all of the economic benefits from use of the identified asset, and the right to direct the use of the identified asset.

At the lease commencement date, we determine if a lease should be classified as an operating or a finance lease (we currently have

finance leases) and recognize a corresponding lease liability and a right-of-use asset on our Balance Sheet. The lease liability is initially and subsequently measured as the present value of the remaining fixed minimum rental payments (including base rent and fixed common area maintenance) using discount rates as of the commencement date. Variable payments (including most utilities, real estate taxes, insurance and variable common area maintenance) are expensed as incurred. The right-of-use asset is initially and subsequently measured at the carrying amount of the lease liability adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives received, unamortized initial direct costs, or impairment charges relating to the right-of-use asset. Right-of-use assets are assessed for impairment using the long-lived assets impairment guidance. The discount rate used to determine the present value of lease payments is our estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as we generally cannot determine the interest rate implicit in the lease.

We recognize expense for our operating leases on a straight-line basis over the lease term. As these leases expire, it can be expected that in the normal course of business they will be renewed or replaced. Renewal option periods are included in the measurement of lease liability, where the exercise is reasonably certain to occur. Key estimates and judgments in accounting for leases include how we determine: (

) lease payments, (

) lease term, and (

) the discount rate used in calculating the lease liability.

Additional information related to our leases is as follows:

	Year Ended
	June 28, 2020
	(in thousands)
Lease costs:
Operating lease costs	$	13,646
Variable lease costs		14,706
Short-term lease cost		6,638
Sublease income		(941	)
Total lease costs	$	34,049

	Year Ended
	June 28, 2020
	(in thousands)
Cash paid for amounts included in measurement of operating lease liabilities	$	11,916
Right-of-use assets obtained in exchange for new operating lease liabilities	$	178

	June 28, 2020
	(in thousands)
Weighted-average remaining lease term - operating leases (in years)	9.6
Weighted-discount rate - operating leases		3.8	%

Maturities of lease liabilities in accordance with ASC

842

as of

June 28, 2020

are as follows (in thousands):

2021	$	10,812
2022		10,038
2023		9,890
2024		9,530
2025		7,163
Thereafter		37,802
Total Future Minimum Lease Payments		85,235
Less Imputed Remaining Interest		14,986
Total	$	70,249

June 30, 2019,

in accordance with ASC

840,

future minimum rental payments under non-cancelable operating leases with initial terms of

one

year or more consisted of the following (in thousands):

2020	$	16,588
2021		13,490
2022		12,081
2023		9,957
2024		9,498
Thereafter		44,953
Total Future Minimum Lease Payments	$	106,567