Leases

6 Months Ended

Jul. 02, 2023

Leases [Abstract]

Leases

LEASES

General

The Company has operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. The Company’s leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

The Company records a right-of-use asset and lease liability for leases extending beyond one year for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of July 2, 2023, there were no significant leases that had not commenced.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of July 2, 2023 and January 1, 2023:

	July 2, 2023				January 1, 2023
Balance Sheet Location	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(in thousands)
Operating lease right-of-use assets	$	79,987			$	81,644
Current portion of operating lease liabilities	$	11,671			$	11,857
Operating lease liabilities	71,155				72,305
Total operating lease liabilities	$	82,826			$	84,162
Property, plant and equipment, net			$	5,726			$	5,845
Accrued expenses			$	2,182			$	2,101
Other long-term liabilities			3,930				4,138
Total finance lease liabilities			$	6,112			$	6,239

Lease Costs

	Three Months Ended				Six Months Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
	(in thousands)
Finance lease cost:
Amortization of right-of-use assets	$	705	$	538	$	1,360	$	1,055
Interest on lease liabilities	85		41		145		70
Operating lease cost	4,698		4,649		9,401		9,567
Short-term lease cost	391		211		747		438
Variable lease cost	608		782		1,341		1,398
Total lease cost	$	6,487	$	6,221	$	12,994	$	12,528

Other Supplemental Information

	Three Months Ended				Six Months Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	55	$	32	$	107	$	53
Operating cash flows from operating leases	4,440		4,813		8,641		9,448
Financing cash flows from finance leases	665		531		1,308		1,010
Right-of-use assets obtained in exchange for new finance lease liabilities	479		1,961		1,036		2,343
Right-of-use assets obtained in exchange for new operating lease liabilities	2,842		6,803		3,963		6,823

Lease Term and Discount Rate

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of July 2, 2023 and January 1, 2023:

	July 2, 2023		January 1, 2023
Weighted-average remaining lease term – finance leases (in years)	3.66		3.82
Weighted-average remaining lease term – operating leases (in years)	8.92		9.29
Weighted-average discount rate – finance leases	4.41	%	3.79	%
Weighted-average discount rate – operating leases	5.97	%	5.89	%

Maturity Analysis

A maturity analysis of lease payments under non-cancellable leases is presented as follows:

Fiscal Year	Operating Leases		Finance Leases
	(in thousands)
2023 (excluding the six months ended July 2, 2023)	$	6,892	$	1,178
2024	15,169		2,201
2025	13,247		1,389
2026	12,970		832
2027	10,472		572
Thereafter	50,237		515
Total future minimum lease payments (undiscounted)	108,987		6,687
Less: Present value discount	(26,161)		(575)
Total lease liability	$	82,826	$	6,112

Leases

LEASES

General

The Company has operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. The Company’s leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.

The Company records a right-of-use asset and lease liability for leases extending beyond one year for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.

As of July 2, 2023, there were no significant leases that had not commenced.

The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of July 2, 2023 and January 1, 2023:

	July 2, 2023				January 1, 2023
Balance Sheet Location	Operating Leases		Finance Leases		Operating Leases		Finance Leases
	(in thousands)
Operating lease right-of-use assets	$	79,987			$	81,644
Current portion of operating lease liabilities	$	11,671			$	11,857
Operating lease liabilities	71,155				72,305
Total operating lease liabilities	$	82,826			$	84,162
Property, plant and equipment, net			$	5,726			$	5,845
Accrued expenses			$	2,182			$	2,101
Other long-term liabilities			3,930				4,138
Total finance lease liabilities			$	6,112			$	6,239

Lease Costs

	Three Months Ended				Six Months Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
	(in thousands)
Finance lease cost:
Amortization of right-of-use assets	$	705	$	538	$	1,360	$	1,055
Interest on lease liabilities	85		41		145		70
Operating lease cost	4,698		4,649		9,401		9,567
Short-term lease cost	391		211		747		438
Variable lease cost	608		782		1,341		1,398
Total lease cost	$	6,487	$	6,221	$	12,994	$	12,528

Other Supplemental Information

	Three Months Ended				Six Months Ended
	July 2, 2023		July 3, 2022		July 2, 2023		July 3, 2022
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	55	$	32	$	107	$	53
Operating cash flows from operating leases	4,440		4,813		8,641		9,448
Financing cash flows from finance leases	665		531		1,308		1,010
Right-of-use assets obtained in exchange for new finance lease liabilities	479		1,961		1,036		2,343
Right-of-use assets obtained in exchange for new operating lease liabilities	2,842		6,803		3,963		6,823

Lease Term and Discount Rate

The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of July 2, 2023 and January 1, 2023:

	July 2, 2023		January 1, 2023
Weighted-average remaining lease term – finance leases (in years)	3.66		3.82
Weighted-average remaining lease term – operating leases (in years)	8.92		9.29
Weighted-average discount rate – finance leases	4.41	%	3.79	%
Weighted-average discount rate – operating leases	5.97	%	5.89	%

Maturity Analysis

A maturity analysis of lease payments under non-cancellable leases is presented as follows:

Fiscal Year	Operating Leases		Finance Leases
	(in thousands)
2023 (excluding the six months ended July 2, 2023)	$	6,892	$	1,178
2024	15,169		2,201
2025	13,247		1,389
2026	12,970		832
2027	10,472		572
Thereafter	50,237		515
Total future minimum lease payments (undiscounted)	108,987		6,687
Less: Present value discount	(26,161)		(575)
Total lease liability	$	82,826	$	6,112