Note 6 - Leases

9 Months Ended

Dec. 26, 2020

Notes to Financial Statements

Lessee, Operating and Finance Leases [Text Block]

6. Leases

The Company determines if an arrangement is a lease at inception of the agreement. Operating leases are included in right-of-use operating assets, and current and noncurrent operating lease obligations in the Company’s Condensed Consolidated Balance Sheets. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. If the lease does not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The right-of-use operating lease assets also include in its calculation any prepaid lease payments made and excludes any lease incentives received from the arrangement. The Company’s lease terms may include options to extend or terminate the lease, and the impact of these options are included in the lease liability and lease asset calculations when the exercise of the option is at the Company’s sole discretion and it is reasonably certain that the Company will exercise that option. The Company will not separate lease and nonlease components for its leases when it is impractical to separate the two, such as leases with variable payment arrangements. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company has operating leases for land, machinery and equipment. The Company also has finance leases for machinery and equipment. The commencement date used for the calculation of the lease obligation is the latter of the commencement date of the new standard ( April 1, 2019) or the lease start date. Certain of the leases have options to extend the life of the lease, which are included in the liability calculation when the option is at the sole discretion of the Company and it is reasonably certain that the Company will exercise the option. In addition, the Company has certain leases that have variable payments based solely on output or usage of the leased asset. These variable operating lease assets are excluded from the Company’s balance sheet presentation and expensed as incurred. Leases with an initial term of 12 months or less are not material.

Upon adoption of Accounting Standards Update (“ASU”) No. 2016-02, the Company determined its right-of-use assets related to the operating leases for its plant equipment in Sunnyside, Washington were partially impaired and therefore were reduced with a corresponding charge to retained earnings of $2,019,000 (which is net of tax). The estimated lives of these assets were shortened due to the planned closure of the facility after the year’s pack.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense were as follows (in thousands):

	Three Months Ended				Nine Months Ended
	December 26, 2020		December 28, 2019		December 26, 2020		December 28, 2019
Lease cost:
Amortization of right of use asset	$	1,200	$	1,084	$	3,531	$	3,191
Interest on lease liabilities		271		321		843		1,033
Finance lease cost		1,471		1,405		4,374		4,224
Operating lease cost		5,832		7,545		18,478		23,234
Total lease cost	$	7,303	$	8,950	$	22,852	$	27,458
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases					$	843	$	1,033
Operating cash flows from operating leases						19,833		24,531
Financing cash flows from finance leases						4,681		4,799
					$	25,357	$	30,363
Right-of-use assets obtained in exchange for new finance lease liabilities					$	1,489	$	3,697
Right-of-use assets obtained in exchange for new operating lease liabilities					$	3,725	$	6,085
Weighted-average lease term (years):
Financing leases						4.7		5.4
Operating leases						3.5		3.9
Weighted-average discount rate (percentage):
Financing leases						4.1		4.2
Operating leases						4.4		4.6

Undiscounted future lease payments under non-cancelable operating leases and financial leases, along with a reconciliation of undiscounted cash flows to operating and financing lease liabilities, respectively, as of December 26, 2020 were as follows (in thousands):

Years ending March 31:	Operating		Financing
Balance of 2021	$	4,106	$	1,886
2022		19,398		7,544
2023		13,926		7,544
2024		7,006		6,016
2025		3,485		2,662
2026-2032		4,720		4,266
Total minimum payment required	$	52,641	$	29,918
Less interest		3,878		2,764
Present value of minimum lease payments		48,763		27,154
Amount due within one year		18,327		6,608
Long-term lease obligations	$	30,436	$	20,546