Leases

3 Months Ended

Mar. 31, 2023

Note 8 – Leases

Finance Leases

The Company entered into finance leases primarily related to purchases of equipment used for manufacturing, computer-related equipment or furniture and fixtures. These finance leases are two to five years in length and have fixed payment amounts for the term of the contract and have options to purchase the assets at the end of the lease term. Supplemental balance sheet information related to finance leases consisted of the following (dollars in thousands):

Note 8 – Leases (Continued)

Finance Leases (Continued)


	March 31, 2023			December 30, 2022
Machinery and equipment	$	30		$	30
Computer equipment and software		18			18
Furniture and fixtures		475			475
Finance lease right-of-use assets, gross		523			523
Less accumulated depreciation		(220	)		(181	)
Finance lease right-of-use assets, net	$	303		$	342

Current finance lease obligations	$	171		$	169
Long-term finance lease obligations		167			210
Total finance lease liability	$	338		$	379
Weighted-average remaining lease term (in years)		2.0			2.2
Weighted-average discount rate		4.12	%		4.10	%

Supplemental cash flow information related to finance leases consisted of the following (dollars in thousands):


	Three Months Ended
	March 31, 2023		April 1, 2022
Amortization of finance lease right-of-use asset	$	39	$	43
Interest on finance lease liabilities		4		3
Cash paid for amounts included in the measurement of finance lease liabilities:
Operating cash flows		4		3
Financing cash flows		42		18

Operating Leases

The Company entered into operating leases primarily related to real property (office, manufacturing and warehouse facilities), automobiles and copiers. These operating leases are two to ten years in length with options to extend. The Company does not include any lease extensions in the initial valuation unless the Company was reasonably certain to extend the lease. Depending on the lease, there are those with fixed payment amounts for the entire length of the contract or payments which increase periodically as noted in the contract or increased at an inflation rate indicator. For operating leases that increase using an inflation rate indicator, the Company used the inflation rate at the time the lease was entered into for the length of the lease term. Supplemental balance sheet information related to operating leases consisted of the following (dollars in thousands):


	March 31, 2023			December 30, 2022
Machinery and equipment	$	807		$	789
Computer equipment and software		445			446
Real property		35,565			34,465
Operating lease right-of-use assets, gross		36,817			35,700
Less accumulated depreciation		(5,635	)		(5,430	)
Operating lease right-of-use assets, net	$	31,182		$	30,270

Current operating lease obligations	$	3,538		$	3,524
Long-term operating lease obligations		28,030			27,136
Total operating lease liability	$	31,568		$	30,660
Weighted-average remaining lease term (in years)		7.4			7.5
Weighted-average discount rate		4.49	%		3.87	%

Note 8 – Leases (Continued)

Operating Leases (Continued)

Supplemental cash flow information related to operating leases was as follows (dollars in thousands):


	Three Months Ended
	March 31, 2023		April 1, 2022
Operating lease cost	$	1,107	$	1,138
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows		1,173		932
Right-of-use assets obtained in exchange for new operating lease liabilities		1,909		675

Future Maturities of Lease Liabilities

Estimated future maturities of lease liabilities under operating and finance leases having initial or remaining non-cancelable lease terms more than one year as of March 31, 2023 is as follows (in thousands):


As of March 31, 2023 12 Months Ended	Operating Leases			Finance Leases
March 2024	$	5,488		$	182
March 2025		5,655			170
March 2026		4,322			—
March 2027		4,364			—
March 2028		4,416			—
Thereafter		13,877			—
Total future minimum lease payments	$	38,122		$	352
Less amounts representing interest		(6,554	)		(14	)
Total lease liability	$	31,568		$	338