LEASES

6 Months Ended

Jun. 25, 2022

LEASES

NOTE 9 - LEASES

NOTE 9 – LEASES

The Company leases land, office space and equipment. Arrangements are assessed at inception to determine if a lease exists and, with the adoption of ASC 842, “Leases,” right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term. Because the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate at the inception of a lease to calculate the present value of lease payments. The Company has elected to apply the short-term lease exception for all asset classes, excluding lease liabilities from the balance sheet and recognizing the lease payments in the period they are incurred.

The components of lease expense were as follows (dollars in thousands):

	Financial Statement	Three Months Ended				Six Months Ended
	Classification	June 25, 2022		June 26, 2021		June 25, 2022		June 26, 2021
Finance leases:
Amortization expense	SG&A Expense	$	53	$	22	$	106	$	41
Interest expense	Interest expense, net		11		5		22		9
Total finance lease expense			64		27		128		50
Operating leases:
Operating costs	Operating costs		58		107		103		259
Selling, general and administrative expenses	SG&A Expense		465		416		876		865
Total operating lease expense			523		523		979		1,124
Total lease expense		$	587	$	550	$	1,107	$	1,174

Supplemental balance sheet information related to leases was as follows (dollars in thousands):

	Financial Statement Classification	June 25, 2022		December 25, 2021
ROU Assets:
Operating leases	Right of use asset	$	4,001	$	4,251
Finance leases	Property and equipment, net		796		979
Total ROU Assets:		$	4,797	$	5,230
Lease liabilities:
Current liabilities
Operating leases	Current portion of leases	$	1,093	$	1,153
Finance leases	Current portion of leases		200		236
Noncurrent Liabilities:
Operating leases	Long-term leases		3,086		3,269
Finance leases	Long-term leases		596		743
Total lease liabilities		$	4,975	$	5,401

The weighted average remaining lease term and weighted average discount rate were as follows:

	At June 25, 2022
Weighted average remaining lease term (years)
Operating leases		4.8
Finance leases		4.0
Weighted average discount rate
Operating leases		0.9	%
Finance leases		8.1	%

Maturities of operating lease liabilities as of June 25, 2022 are as follows (dollars in thousands):

Years ending:	Operating leases			Finance leases			Total
2022 (remaining months)		656			114			770
2023		923			228			1,151
2024		830			208			1,038
2025		620			173			793
2026		372			144			516
2027 and thereafter		817			—			817
Total lease payments		4,218			867			5,085
Less: imputed interest		(39	)		(71	)		(110	)
Total lease liabilities	$	4,179		$	796		$	4,975