(4) Commitments & Contingencies

9 Months Ended

Sep. 26, 2020

Commitments (note 4)

(4) Commitments & Contingencies

(4)  Commitments & Contingencies

Commitments

Leases

The Company has two real estate leases—one expiring in February 2021 and one with an 11 month duration expiring December 2020. The latter is not expected to be renewed and has not been recorded on the balance sheet in accordance with Accounting Standards Codification (ASC) 842 for leases. CPS also has a few other leases for equipment which are minor in nature and are generally short-term in duration. None of these have been capitalized.

The lease expiring in 2021 (the “Norton facility lease’) is included as a right-of-use lease asset and corresponding lease liability on the balance sheet. This asset and liability was recognized on December 30, 2018 based on the present value of remaining lease payments over the remaining lease term using the Company’s incremental borrowing rate at date of adoption. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating Leases

Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense is allocated between Cost of Product Sales and Selling, General and Administrative Expense in the income statement

The following table presents information about the amount, timing and uncertainty of cash flows arising from the Company’s capitalized operating leases as of September 26, 2020

(Dollars in Thousands)		Sept 26, 2020
Maturity of capitalized lease liabilities		Lease payments
2020 (remaining)		39
2021		26
Total undiscounted operating lease payments	$	65
Less: Imputed interest		(2)
Present value of operating lease liability	$	63

Balance Sheet Classification
Current lease liability	$	63
Long-term lease liability		—
Total operating lease liability	$	63
Other Information
Weighted-average remaining lease term for capitalized operating leases		5 months
Weighted-average discount rate for capitalized operating leases		6.5%

Cash Flows

An initial right-of-use asset of $310 thousand was recognized as a non-cash asset addition with the adoption of the new lease accounting standard on December 30, 2018. Cash paid for the amounts included in the present value of operating lease liabilities was $114 thousand during the first nine months of 2020 and is included in operating cash flows.

Operating Lease Costs

Operating lease cost was $114 thousand during the first nine months of 2020. This cost is related to its long-term operating lease. All other short-term leases were immaterial.