INSTEEL INDUSTRIES INC Leases Disclosure
(13) Leases
We use operating leases for certain equipment, office space and vehicles. We determine whether an arrangement is a lease at its inception if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases with an initial term of months or less are not recorded on our consolidated balance sheet. Lease expense for operating leases with original terms of more than twelve months was $1.9 million in 2025, $1.3 million in 2024 and $1.3 million in 2023.
Most of our leases include options to extend or terminate the leases which are exercised at our sole discretion. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate as of the commencement date in determining the present value of lease payments, which represents an estimate of the interest rate we would incur at the lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term.
Supplemental cash flow and non-cash information related to leases is as follows:
|
(In thousands) |
September 27, 2025 |
September 28, 2024 |
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|
Cash paid for operating leases included in operating cash flows |
$ | 1,875 | $ | 1,348 | ||||
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Right-of-use assets obtained in exchange for new lease obligations |
3,811 | 946 | ||||||
Supplemental balance sheet information related to leases is as follows:
|
(In thousands) |
September 27, 2025 |
September 28, 2024 |
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Right-of-use assets: |
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|
|
$ | 3,939 | $ | 1,703 | ||||
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Lease liabilities: |
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|
|
$ | 1,852 | $ | 877 | ||||
|
|
2,051 | 811 | ||||||
|
Total operating lease liabilities |
$ | 3,903 | $ | 1,688 | ||||
The weighted average remaining lease terms and discount rates for operating leases are as follows:
|
September 27, 2025 |
September 28, 2024 |
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|
Weighted average lease term (in years) |
2.2 | 2.0 | ||||||
|
Weighted average discount rate |
8.0 | % | 8.4 | % | ||||
Aggregate future operating lease payments as of September 27, 2025, are as follows:
|
(In thousands) |
||||
|
2026 |
$ | 2,085 | ||
|
2027 |
1,539 | |||
|
2028 |
611 | |||
|
2029 |
13 | |||
|
2030 |
3 | |||
|
Total future operating lease payments |
4,251 | |||
|
Less: imputed interest |
(348 | ) | ||
|
Present value of operating lease liabilities |
$ | 3,903 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Oct 23, 2025 | Showing above |
| 2024 | Oct 24, 2024 | |
| 2023 | Oct 26, 2023 | |
| 2022 | Oct 27, 2022 | |
| 2021 | Oct 28, 2021 | |
| 2020 | Oct 29, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.