LEASES

9 Months Ended

Sep. 24, 2022

LEASES

LEASES

NOTE 9 – LEASES

The Company leases land, office and shop 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):

		Three Months Ended				Nine Months Ended
	Financial Statement Classification	September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021
Finance leases:
Amortization expense	SG&A Expense	$	53	$	19	$	159	$	61
Interest expense	Interest expense, net		11		4		33		13
Total finance lease expense			64		23		192		74
Operating leases:
Operating costs	Operating costs		86		131		189		391
Selling, general and administrative expenses	SG&A Expense		543		462		1,420		1,327
Total operating lease expense			629		593		1,609		1,718
Total lease expense		$	693	$	616	$	1,801	$	1,792

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

	Financial Statement Classification	September 24, 2022		December 25, 2021
ROU Assets:
Operating leases	Right of use asset	$	8,138	$	4,251
Finance leases	Property and equipment, net		744		979
Total ROU Assets:		$	8,882	$	5,230
Lease liabilities:
Current liabilities
Operating leases	Current portion of leases	$	1,360	$	1,153
Finance leases	Current portion of leases		200		236
Noncurrent Liabilities:
Operating leases	Long-term leases		6,978		3,269
Finance leases	Long-term leases		547		743
Total lease liabilities		$	9,085	$	5,401

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

	At September 24, 2022
Weighted average remaining lease term (years)
Operating leases		7.7
Finance leases		3.8
Weighted average discount rate
Operating leases		11.3	%
Finance leases		7.7	%

Maturities of operating lease liabilities as of September 24, 2022 are as follows (dollars in thousands):

Years ending:	Operating leases			Finance leases			Total
2022 (remaining months)		442			58			500
2023		1,464			228			1,692
2024		1,323			208			1,531
2025		1,140			173			1,313
2026		919			144			1,063
2027 and thereafter		4,114			—			4,114
Total lease payments		9,402			811			10,213
Less: imputed interest		(1,064	)		(64	)		(1,128	)
Total lease liabilities	$	8,338		$	747		$	9,085