LEASES
The Company has several commitments under operating and financing leases for warehouses, manufacturing facilities, office buildings, and equipment with initial terms that expire at various dates during the next 1 year to 6 years.
The Company has some leases that include an extension clause. Management has considered the likelihood of exercising each extension option included and estimated the duration of the extension option, for those leases management determined to be reasonably certain, in calculating the lease term for measurement of the right of use asset and liability.
For operating leases, management assumed a discount rate of 4.07%. The weighted average discount rate is disclosed in the tables below.
The components of lease cost were as follows as of June 28, 2025 and June 29, 2024 (in thousands):
| | | | | | | | | | | | | | |
| | Year Ended | | Year Ended |
| Lease cost | Classification | June 28, 2025 | | June 29, 2024 |
| Operating lease cost | Cost of sales | $ | 5,135 | | | $ | 4,814 | |
| Operating lease cost | Selling, general and administrative expenses | $ | 732 | | | $ | 734 | |
| | | | |
| Financing lease cost | Cost of sales | $ | 3,369 | | | $ | 4,865 | |
| Financing lease cost | Selling, general and administrative expenses | $ | 171 | | | $ | 206 | |
| | | | |
| Total lease cost | | $ | 9,407 | | | $ | 10,619 | |
| | | | |
| Fixed lease cost | | $ | 6,335 | | | $ | 6,169 | |
| Short-term lease cost | | 3,072 | | | 4,450 | |
| Total lease cost | | $ | 9,407 | | | $ | 10,619 | |
Amounts reported in the Consolidated Balance Sheet as of June 28, 2025 and June 29, 2024 were (in thousands, except weighted average lease term and discount rate):
| | | | | | | | | | | |
| June 28, 2025 | | June 29, 2024 |
| Operating Leases: | | | |
| Operating lease right of use assets | $ | 11,347 | | | $ | 15,416 |
Operating lease liabilities (1) | $ | 11,347 | | | $ | 15,416 |
| | | |
| Weighted-average remaining lease term (in years) | | | |
| Operating leases | 3.29 | | 3.97 |
| | | |
| Weighted-average discount rate | | | |
| Operating leases | 4.07% | | 4.00% |
| | | |
| Financing Leases (2): | | | |
| Financing lease right of use assets | $ | 2,244 | | | $ | 3,569 |
| Financing lease liabilities | $ | 1,912 | | | $ | 2,128 |
| | | |
| Weighted-average remaining lease term (in years) | | | |
| Financing leases | 2.35 | | 1.06 |
| | | |
| Weighted-average discount rate | | | |
| Financing leases | 10.11% | | 11.18% |
(1) The current portion of the total operating lease liabilities of $4.5 million is classified under Other Current Liabilities, resulting in $6.9 million classified under Operating Lease Liabilities in the Long-term Liabilities section of the condensed consolidated balance sheet.
(2) The total finance lease right of use assets of $2.2 million is classified under Other Long-term Assets. The current portion of the total finance lease liabilities of $1.0 million is classified under Other Current Liabilities, resulting in $1.0 million classified in Other Long-term Liabilities section of the condensed consolidated balance sheet.
Future lease payments under non-cancellable leases as of June 28, 2025 are as follows (in thousands):
| | | | | | | | | | | | | | |
| Fiscal Years Ending | | Operating Leases | | Finance Leases |
| 2026 | | $ | 4,488 | | | $ | 983 | |
| 2027 | | 3,404 | | | 519 | |
| 2028 | | 2,324 | | | 606 | |
| 2029 | | 1,051 | | | — | |
| 2030 | | 470 | | | — | |
| Thereafter | | 352 | | | — | |
| Total undiscounted lease payments | | 12,089 | | | 2,108 | |
| Less: present value discount | | (742) | | | (196) | |
| Total lease liabilities | | $ | 11,347 | | | $ | 1,912 | |
As of June 28, 2025, we have additional operating and finance leases for commercial properties and equipment that have not yet commenced with future lease payments of approximately $28.6 million and $5.1 million, respectively.