LEASES

COVID-19 Pandemic

In response to the large volume of anticipated lease concessions to be granted related to the effects of the COVID-19 pandemic, and the resulting expected cost and complexity of applying the lease modification requirements in ASC 842, the FASB issued Staff Q&A-Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic, in April 2020 as interpretive guidance to provide clarity in response to the crisis. The FASB staff indicated that it would be acceptable for entities to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how they would be accounted for as though enforceable rights and obligations for those concessions existed in the original contract. Consequently, for such lease concessions, an entity will not need to reassess each existing contract to determine whether enforceable rights and obligations for concessions exist and an entity can then elect to apply or not to apply the lease modification guidance in ASC 842 to those contracts. This election is available for concessions related to the effects of the COVID-19 pandemic that will result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract.

The Company has made this election and, consequently, for such lease concessions, did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts. The Company has accounted for the concessions as if no changes to the lease contract were made and has subsequently increased accounts payable and has continued to recognize expense during the deferral period.

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



	Balance Sheet Location	June 27, 2020		December 28, 2019
Operating Leases:
Operating lease right-of-use assets	Operating lease right-of-use assets	$	23,741	$	24,835

Current portion of operating lease liabilities	Current portion of operating lease liabilities	3,336		3,172
Noncurrent portion of operating lease liabilities	Operating lease liabilities	20,968		22,123
Total operating lease liabilities		$	24,304	$	25,295

Finance Leases:
Finance lease right-of-use assets (1)	Property, plant, and equipment, net	$	15,913	$	15,152

Current portion of finance lease liabilities (1)	Current portion of long-term debt	3,858		4,011
Noncurrent portion of finance lease liabilities (1)	Long-term debt	16,097		15,472
		$	19,955	$	19,483

(1) Includes leases classified as failed sale-leaseback transactions.

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



	Three Months Ended				Six Months Ended
	June 27, 2020		June 29, 2019		June 27, 2020		June 29, 2019
Operating lease cost	$	1,307	$	815	$	2,599	$	1,723

Finance lease cost:
Amortization of lease assets (1)	790		750		1,580		1,498
Interest on lease liabilities (1)	348		335		691		685
Total finance lease costs (1)	$	1,138	$	1,085	$	2,271	$	2,183

(1) Includes leases classified as failed sale-leaseback transactions.

Other supplemental information related to leases is summarized as follows:



	June 27, 2020		June 29, 2019
Weighted average remaining lease term (in years):
Operating leases	8.02		6.20
Finance leases (1)	11.53		11.62

Weighted average discount rate:
Operating leases	6.93	%	8.47	%
Finance leases (1)	9.19	%	6.65	%

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	2,330		1,762
Operating cash flows from finance leases (1)	691		685
Financing cash flows from finance leases (1)	1,747		2,089

(1) Includes leases classified as failed sale-leaseback transactions.

The following table summarizes the Company's future minimum lease payments under non-cancellable contractual obligations for operating and financing liabilities as of June 27, 2020:



Fiscal Year	Operating Leases	Finance Leases
2020	2,509	2,186
2021	4,683	5,457
2022	4,182	3,323
2023	3,247	2,284
2024	2,940	1,045
Thereafter	14,529	16,039
Total future minimum lease payments (undiscounted)	32,090	30,334
Less: Present value discount	7,786	10,379
Total lease liability	24,304	19,955