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Note 10 - Leases

9 Months Ended

Sep. 30, 2023

10.

Leases

We lease certain of our facilities, equipment and vehicles under non-cancelable operating and finance leases. Leases with initial terms of 12 months or less are not recorded on the condensed consolidated balance sheet, but we recognize those lease payments in the condensed consolidated statements of income 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 34 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	September 30, 2023			December 31, 2022
Assets
Operating lease assets	Operating lease right-of-use assets	$	17,287		$	22,804
Finance lease assets	Property, plant and equipment, net ⁽¹⁾		255			323
Total lease assets		$	17,542		$	23,127
Liabilities
Current
Operating	Other accrued liabilities	$	4,971		$	4,927
Finance	Other accrued liabilities		12			49
Noncurrent
Operating	Long-term lease liabilities		13,882			19,185
Finance	Long-term lease liabilities		16			24
Total lease liabilities		$	18,881		$	24,185

Weighted-average remaining lease term (years)
Operating leases			5.6			6.2
Finance leases			2.3			1.7

Weighted-average discount rate
Operating leases			6.4	%		6.2	%
Finance leases			3.8	%		2.2	%

(1)

Finance lease assets are recorded net of accumulated amortization of $0.3 million and $0.2 million as of September 30, 2023 and December 31, 2022, respectively.

The components of lease expense were as follows:

	Three Months Ended						Nine Months Ended
(in thousands)	September 30, 2023			September 24, 2022			September 30, 2023			September 24, 2022
Operating leases	$	1,642		$	1,654		$	5,001		$	5,046
Variable lease expense		561			520			1,683			1,583
Short-term operating leases		6			1			19			3
Finance leases
Amortization of leased assets		12			11			66			69
Interest on lease liabilities		-			-			1			1
Sublease income		(7	)		(16	)		(25	)		(54	)
Net lease cost	$	2,214		$	2,170		$	6,745		$	6,648

Future minimum lease payments at September 30, 2023, are as follows:

	Operating			Finance
(in thousands)	leases			leases			Total
2023	$	1,490		$	4		$	1,494
2024		5,822			11			5,833
2025		4,948			11			4,959
2026		2,446			3			2,449
2027		1,493			-			1,493
Thereafter		6,796			-			6,796
Total lease payments		22,995			29			23,024
Less: Interest		(4,142	)		(1	)		(4,143	)
Present value of lease liabilities	$	18,853		$	28		$	18,881

Supplemental cash flow information related to leases was as follows:

	Nine Months Ended
(in thousands)	September 30, 2023		September 24, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,005	$	4,946
Operating cash flows from finance leases	$	1	$	1
Financing cash flows from finance leases	$	48	$	126
Leased assets obtained in exchange for new operating lease liabilities	$	664	$	1,308
Financing lease assets acquired in MCT acquisition	$	19	$	-
Operating lease assets acquired in MCT acquisition	$	130	$	-