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Note 10 - Leases

3 Months Ended

Mar. 30, 2024

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 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 34 years, some of which include one or more options to extend the lease for up to 25 years. Our lease terms include renewal terms when we are reasonably certain that 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	March 30, 2024			December 30, 2023
Assets
Operating lease assets	Operating lease right-of-use assets ⁽¹⁾	$	15,935		$	16,778
Finance lease assets	Property, plant and equipment, net ⁽¹⁾		9,063			247
Total lease assets		$	24,998		$	17,025
Liabilities
Current
Operating	Other accrued liabilities ⁽¹⁾	$	4,863		$	5,122
Finance	Other accrued liabilities ⁽¹⁾		7,981			11
Noncurrent
Operating	Long-term lease liabilities		12,509			13,160
Finance	Long-term lease liabilities		11			15
Total lease liabilities		$	25,364		$	18,308

Weighted-average remaining lease term (years)
Operating leases			5.4			5.5
Finance leases			0.3			1.7

Weighted-average discount rate
Operating leases			6.4	%		6.4	%
Finance leases			2.7	%		4.0	%

(1)

Finance lease assets are recorded net of accumulated amortization of $0.3 million as of March 30, 2024 and December 30, 2023. During the first quarter of fiscal 2024, we executed an agreement to purchase our leased facility in Malaysia for $8.8 million, with the expectation that the title will transfer during 2024. We treated this transaction as a lease modification, and changed the classification to a finance lease, reducing our operating lease assets and liabilities by $0.4 million and increasing our finance lease assets and current lease liabilities by $8.8 million and $7.9 million, respectively.

The components of lease expense were as follows:

	Three Months Ended
(in thousands)	March 30, 2024			April 1, 2023
Operating leases	$	1,618		$	1,679
Variable lease expense		570			559
Short-term operating leases		1			6
Finance leases
Amortization of leased assets		21			26
Interest on lease liabilities		53			-
Sublease income		(3	)		(10	)
Net lease cost	$	2,260		$	2,260

Future minimum lease payments at March 30, 2024, are as follows:

	Operating			Finance
(in thousands)	leases			leases			Total
2024	$	4,410		$	8,038		$	12,448
2025		5,451			11			5,462
2026		2,809			3			2,812
2027		1,587			-			1,587
2028		1,270			-			1,270
Thereafter		5,538			-			5,538
Total lease payments		21,065			8,052			29,117
Less: Interest		(3,693	)		(60	)		(3,753	)
Present value of lease liabilities	$	17,372		$	7,992		$	25,364

Supplemental cash flow information related to leases was as follows:

	Three Months Ended
(in thousands)	March 30, 2024		April 1, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,670	$	1,675
Financing cash flows from finance leases	$	8	$	24
Leased assets obtained in exchange for new finance lease liabilities	$	8,844	$	-
Leased assets obtained in exchange for new operating lease liabilities	$	1,049	$	95
Financing lease assets acquired in MCT acquisition	$	-	$	19
Operating lease assets acquired in MCT acquisition	$	-	$	130