Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.22.2.2
Leases
 6 Months Ended
Jul. 02, 2022
Leases [Abstract]  
Leases Leases
On January 2, 2022, the Group adopted ASU 2016-02, Leases, using the optional transition method. Under this method, the Group has recognized the cumulative effect adjustment to the opening balance of retained earnings. The Group has elected to adopt the package of practical expedients which apply to leases that commenced before the adoption date. By electing the package of practical expedients, the Group did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, and the initial direct costs for any existing leases. At lease commencement, a right-of-use (“ROU”) asset and lease liability is recorded based on the present value of the future lease payments over the lease term. The Group has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. The Group leases facilities, vehicles, and other equipment under long-term operating and financing leases with varying terms.
In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar service, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. Furthermore, for all other types of leases the practical expedient was also elected whereby lease and non-lease components have been combined. The Group uses the non-cancellable lease term unless it is reasonably certain that a renewal or termination option will be exercised. When available, the Group will use the rate implicit in the lease to discount lease payments to present value, however as most leases do not provide an implicit rate, the Group will estimate the incremental borrowing rate to discount the lease payments. The Group estimates the incremental borrowing rate based on the rates of interest that the Group would have to pay to borrow an amount equal to the lease payments on a collateralized basis, over a similar term, and in a similar economic environment. The ROU asset also includes any lease prepayments and initial direct costs, offset by lease incentives. The Group does not consider renewal periods or early terminations to be reasonably certain and are thus not included in the lease term for real estate or equipment assets.
The components of ROU assets and lease liabilities were as follows:
(in thousands) Balance Sheet Classification July 2, 2022
Assets:
Operating lease assets Right-of-use assets, net $ 39,891 
Finance lease assets Right-of-use assets, net 644 
Total leased assets $ 40,535 
Liabilities:
Current:
Operating Other accrued expenses $ 4,944 
Financing Current maturities of long-term debt 161 
Noncurrent:
Operating Other long-term liabilities $ 37,579 
Financing Long-term debt 490 
Total lease liabilities $ 43,174 
The components of lease expense were as follows:
Three Months Ended Six Months Ended
(in thousands) July 2, 2022 July 2, 2022
Operating lease cost $ 2,018  $ 4,005 
Short-term lease cost —  60 
Financial lease cost:
Amortization of right-of-use assets $ 45  $ 62 
Interest on lease liabilities 9  12 
Total lease cost $ 2,072  $ 4,139 
Other information related to leases was as follows:
July 2, 2022
Weighted Average Remaining Lease Term
Operating Leases 9.8 years
Finance Leases 3.7 years
Weighted Average Discount Rate
Operating Leases 6.6%
Finance Leases 5.0%
As of July 2, 2022, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:
(in thousands)
2022 $ 3,801 
2023 7,354 
2024 6,457 
2025 5,759 
2026 5,215 
Thereafter 30,801 
Total future lease payments $ 59,387 
Less imputed interest $ (16,864)
Present value of future lease payments $ 42,523 
As of July 2, 2022, minimum repayments of long-term debt under financing leases were as follows:
(in thousands)
2022 $ 95 
2023 189 
2024 189 
2025 189 
2026 40 
Thereafter 11 
Total future lease payments $ 713 
Less imputed interest $ (62)
Present value of future lease payments $ 651 
Leases Leases
On January 2, 2022, the Group adopted ASU 2016-02, Leases, using the optional transition method. Under this method, the Group has recognized the cumulative effect adjustment to the opening balance of retained earnings. The Group has elected to adopt the package of practical expedients which apply to leases that commenced before the adoption date. By electing the package of practical expedients, the Group did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, and the initial direct costs for any existing leases. At lease commencement, a right-of-use (“ROU”) asset and lease liability is recorded based on the present value of the future lease payments over the lease term. The Group has elected not to recognize a ROU asset and lease liability for leases with terms of 12 months or less. The Group leases facilities, vehicles, and other equipment under long-term operating and financing leases with varying terms.
In addition to the base rent, real estate leases typically contain provisions for common-area maintenance and other similar service, which are considered non-lease components for accounting purposes. For our real estate leases, we apply a practical expedient to include these non-lease components in calculating the ROU asset and lease liability. Furthermore, for all other types of leases the practical expedient was also elected whereby lease and non-lease components have been combined. The Group uses the non-cancellable lease term unless it is reasonably certain that a renewal or termination option will be exercised. When available, the Group will use the rate implicit in the lease to discount lease payments to present value, however as most leases do not provide an implicit rate, the Group will estimate the incremental borrowing rate to discount the lease payments. The Group estimates the incremental borrowing rate based on the rates of interest that the Group would have to pay to borrow an amount equal to the lease payments on a collateralized basis, over a similar term, and in a similar economic environment. The ROU asset also includes any lease prepayments and initial direct costs, offset by lease incentives. The Group does not consider renewal periods or early terminations to be reasonably certain and are thus not included in the lease term for real estate or equipment assets.
The components of ROU assets and lease liabilities were as follows:
(in thousands) Balance Sheet Classification July 2, 2022
Assets:
Operating lease assets Right-of-use assets, net $ 39,891 
Finance lease assets Right-of-use assets, net 644 
Total leased assets $ 40,535 
Liabilities:
Current:
Operating Other accrued expenses $ 4,944 
Financing Current maturities of long-term debt 161 
Noncurrent:
Operating Other long-term liabilities $ 37,579 
Financing Long-term debt 490 
Total lease liabilities $ 43,174 
The components of lease expense were as follows:
Three Months Ended Six Months Ended
(in thousands) July 2, 2022 July 2, 2022
Operating lease cost $ 2,018  $ 4,005 
Short-term lease cost —  60 
Financial lease cost:
Amortization of right-of-use assets $ 45  $ 62 
Interest on lease liabilities 9  12 
Total lease cost $ 2,072  $ 4,139 
Other information related to leases was as follows:
July 2, 2022
Weighted Average Remaining Lease Term
Operating Leases 9.8 years
Finance Leases 3.7 years
Weighted Average Discount Rate
Operating Leases 6.6%
Finance Leases 5.0%
As of July 2, 2022, future minimum lease payments under noncancellable operating leases with initial or remaining lease terms in excess of one year were as follows:
(in thousands)
2022 $ 3,801 
2023 7,354 
2024 6,457 
2025 5,759 
2026 5,215 
Thereafter 30,801 
Total future lease payments $ 59,387 
Less imputed interest $ (16,864)
Present value of future lease payments $ 42,523 
As of July 2, 2022, minimum repayments of long-term debt under financing leases were as follows:
(in thousands)
2022 $ 95 
2023 189 
2024 189 
2025 189 
2026 40 
Thereafter 11 
Total future lease payments $ 713 
Less imputed interest $ (62)
Present value of future lease payments $ 651