LEASES

The Company determines if an arrangement is an operating lease or a financing lease at inception. Lease assets and obligations are recognized at the lease commencement date based on the present value of lease payments over the term of the lease. The Company generally uses its incremental borrowing rate, which is based on information available at the lease commencement date, to determine the present value of lease payments.

The Company has operating leases primarily for real estate and equipment used in manufacturing. Operating lease expense is recognized in continuing operations by amortizing the amount recorded as an asset on a straight-line basis over the lease term. Financing lease expense is comprised of both interest expense, which will be recognized using the effective interest method, and amortization of the right-of-use assets. These expenses are presented consistently with the presentation of other interest expense and amortization or depreciation of similar assets. In determining lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.

Balance sheet information related to right-of-use assets and liabilities is as follows:



	Balance Sheet Location	September 28, 2019
Operating Leases:
Operating lease right-of-use assets	Operating lease right-of-use assets	$	7,795

Current portion of operating lease liabilities	Current portion of operating lease liabilities	1,821
Noncurrent portion of operating lease liabilities	Operating lease liabilities	6,390
Total operating lease liabilities		$	8,211

Finance Leases:
Finance lease right-of-use assets	Property, plant, and equipment, net	$	15,802

Current portion of finance lease liabilities	Current portion of long-term debt	4,082
Noncurrent portion of finance lease liabilities	Long-term debt	16,444
		$	20,526

Lease cost recognized in the consolidated condensed financial statements is summarized as follows:



	Three Months Ended		Nine Months Ended
	September 28, 2019		September 28, 2019
Operating lease cost	$	778	$	2,501

Finance lease cost:
Amortization of lease assets	751		2,249
Interest on lease liabilities	354		1,039
Total finance lease costs	$	1,105	$	3,288

Other supplemental information related to leases is summarized as follows:



	September 28, 2019
Weighted average remaining lease term (in years):
Operating leases	6.20
Finance leases	11.80

Weighted average discount rate:
Operating leases	8.51	%
Finance leases	6.69	%

Cash paid for amounts included in the measurement of lease liabilities for the nine months ended September 28, 2019:
Operating cash flows from operating leases	2,534
Operating cash flows from finance leases	1,039
Financing cash flows from finance leases	3,122

The following table summarizes the Company's undiscounted future minimum lease payments under non-cancellable contractual obligations for operating and financing liabilities as of September 28, 2019:



Fiscal Year	Operating Leases		Finance Leases
2019	643		1,382
2020	2,360		5,207
2021	1,986		4,347
2022	1,559		2,015
2023	877		1,283
Thereafter	3,351		17,082
Total future minimum lease payments (undiscounted)	10,776		31,316
Less: Present value discount	(2,565	)	(10,790	)
Total lease liability	8,211		20,526