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Note 9 - Leases

6 Months Ended

Jun. 27, 2020

9.	Leases

We lease certain of our facilities, equipment and vehicles under non-cancelable operating and finance leases. Leases with initial terms with 12 months or less are not recorded on the condensed consolidated balance sheet, but we recognized those lease payments in the condensed consolidated statements of operations on a straight-line basis over the lease term. Lease and non-lease components are included in the calculation of the ROU asset and lease liabilities.

Our leases have remaining lease terms of 1 year to 38 years, some of which include one or more options to extend the leases for up to 25 years. Our lease term includes renewal terms when we are reasonably certain we will exercise the renewal options.

We sublease certain leased assets to third parties, mainly as a result of unused space in our facilities. Supplemental balance sheet information related to leases was as follows:

(in thousands)	Classification	June 27, 2020			December 28, 2019
Assets
Operating lease assets	Operating lease right-of-use assets	$	31,469		$	33,269
Finance lease assets	Property, plant and equipment, net ⁽¹⁾		2,841			2,515
Total lease assets		$	34,310		$	35,784
Liabilities
Current
Operating	Other accrued liabilities	$	5,462		$	5,458
Finance	Other accrued liabilities		2,691			2,574
Noncurrent
Operating	Long-term lease liabilities		27,234			28,877
Finance	Long-term lease liabilities		198			-
Total lease liabilities		$	35,585		$	36,909

Weighted-average remaining lease term (years)
Operating leases			7.6			7.9
Finance leases			0.3			0.5

Weighted-average discount rate
Operating leases			6.3	%		6.3	%
Finance leases			4.0	%		4.5	%

(1)

Finance lease assets are recorded net of accumulated amortization of $0.2 million and $0.1 million as of June 27, 2020 and December 28, 2019 respectively.

The components of lease expense were as follows:

	Three Months Ended						Six Months Ended
(in thousands)	June 27, 2020			June 29, 2019			June 27, 2020			June 29, 2019
Operating leases	$	2,112		$	2,139		$	4,263		$	4,261
Variable lease expense		547			635			1,079			1,201
Short-term operating leases		19			66			38			144
Finance leases
Amortization of leased assets		28			21			48			62
Interest on lease liabilities		29			29			57			88
Sublease income		(31	)		(34	)		(63	)		(70	)
Net lease cost	$	2,704		$	2,856		$	5,422		$	5,686

Future minimum lease payments at June 27, 2020, are as follows:

	Operating			Finance
(in thousands)	leases⁽¹⁾			leases		Total
2020	$	3,777		$	2,629	$	6,406
2021		6,646			125		6,771
2022		5,848			125		5,973
2023		5,090			10		5,100
2024		4,736			-		4,736
Thereafter		16,225			-		16,225
Total lease payments		42,322			2,889		45,211
Less: Interest		(9,626	)		-		(9,626	)
Present value of lease liabilities	$	32,696		$	2,889	$	35,585

(1)

Excludes sublease income of $0.1 million in 2021.

Supplemental cash flow information related to leases was as follows:

	Six Months Ended
(in thousands)	June 27, 2020		June 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	4,123	$	3,628
Operating cash flows from finance leases	$	57	$	73
Financing cash flows from finance leases	$	68	$	17
Leased assets obtained in exchange for new finance lease liabilities	$	360	$	-
Leased assets obtained in exchange for new operating lease liabilities	$	1,576	$	38,487