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Note 16 - Leases

6 Months Ended

Jul. 01, 2023

16.

Leases

Leases are recorded in accordance with FASB ASC 842, Leases which requires lessees to recognize a right of use (“ROU”) asset and an operating right of use liability for all leases with terms greater than 12 months and requires disclosures by lessees and lessors about the amount, timing and uncertainty of cash flows arising from leases.

The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The right of use asset also consists of any lease incentives received. The lease terms used to calculate the right of use asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. The Company has lease agreements which require payments for lease and non-lease components. The Company has elected to account for these as a single lease component with the exception of its real estate leases.

The components of lease expense were as follows:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022

Operating lease cost	$	357	$	432	$	729	$	881

Finance lease cost
Amortization of right of use assets	$	115	$	106	$	252	$	216
Interest on lease liabilities		1		2		2		4
Total finance lease cost	$	116	$	108	$	254	$	220

Supplemental Cash Flow information related to leases was as follows:

	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 1, 2023		July 2, 2022				July 1, 2023	July 2, 2022

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	363	$	437		$	743	$	915
Operating cash flows from finance leases	$	1	$	4		$	3	$	6
Financing cash flows from finance leases	$	115	$	180		$	231	$	271

Right of use assets obtained in exchange for lease obligations
Operating leases		-	$	58			-	$	732
Finance leases		-		-			-		-

Supplemental Balance Sheet information as of July 1, 2023 and December 31, 2022 related to leases was as follows:

	July 1, 2023			December 31, 2022
Operating leases
Operating lease right of use assets	$	3,203		$	3,665

Operating right of use liability - current	$	(,1,091	)	$	(1,349	)
Operating right of use liability - non-current		(2,508	)		(2,932	)
Total operating lease liabilities	$	(3,599	)	$	(4,281	)

Finance leases
Property and equipment - (right of use assets)	$	926		$	1,177
Accumulated depreciation		(463	)		(461	)
Property and equipment, net	$	463		$	716

Finance lease liability - current	$	(464	)	$	(462	)
Finance lease liability - non-current		-			(232	)
Total finance lease liabilities	$	(464	)	$	(694	)

Weighted average remaining lease term in years
Operating leases		7.90			6.78
Finance leases		1.00			1.50

Weighted average discount rate
Operating leases		3.17	%		3.10	%
Finance leases		0.87	%		0.87	%

Maturities of lease liabilities are as follows:

Fiscal Year	Operating Leases			Finance Leases
2023 (After July 1, 2023)	$	716		$	233
2024		754			233
2025		493			-
2026		409			-
2027		302			-
Thereafter		1,456			-

Total lease payments	$	4,130		$	466
Less: imputed interest		(531	)		(2	)
Total	$	3,599		$	464