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Leases

6 Months Ended

Dec. 31, 2019

(8) Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets, Accrued expenses, and Long-term operating lease liabilities in the Unaudited Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made at or before the commencement date and are reduced by any lease incentives received. The Company’s lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options. For the majority of its leases, the Company concluded that it is not reasonably certain that any renewal options would be exercised, and, therefore, the amounts are not recognized as part of Operating lease right-of-use assets nor Operating lease liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the expected lease term.

The Company’s most significant leases are real estate leases of office space. The remaining operating leases are primarily comprised of leases of printers and other equipment. For all leases, the Company has elected the practical expedient permitted under Topic 842 to combine lease and non-lease components. As a result, non-lease components, such as common area or equipment maintenance charges, are accounted for as a single lease element. The Company does not have any finance leases.

Fixed lease expense payments are recognized on a straight-line basis over the lease term. Variable lease payments vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time, and are often due to changes in an external market rate or the value of an index (e.g. Consumer Price Index). Certain of the Company’s operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance, payments based on the usage of the asset, and rental payments adjusted periodically for inflation. Variable payments are expensed as incurred and included within variable rent expense.

The Company’s lease agreements do not contain material residual value guarantees, restrictions, or covenants.

The components of operating lease expense were as follows:


	Three Months Ended		Six Months Ended
	December 31, 2019		December 31, 2019
Operating lease cost	$	2,374	$	4,637
Short-term lease cost		1		14
Variable lease cost		725		1,460
Total lease costs	$	3,100	$	6,111

The classification of the Company’s operating lease right-of-use assets and operating lease liabilities and other supplemental information related to the Company’s operating leases are as follows:


	December 31, 2019
Operating lease right-of-use assets	$	51,659
Accrued expenses	$	7,694
Long-term operating lease liabilities	$	76,929
Weighted-average remaining lease term (years)		10.56
Weighted-average discount rate		3.84	%

The following table summarizes supplemental cash flow information related to the Company’s operating leases as of December 31, 2019:


	Six Months Ended
	December 31, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	5,088
Operating lease assets obtained in exchange for new liabilities	$	2,627

The undiscounted cash flows for future maturities of the Company’s operating lease liabilities and the reconciliation to the balance of operating lease liabilities reflected on the Company’s balance sheet are as follows as of December 31, 2019:


Remainder of fiscal 2020	$	5,378
Fiscal 2021		10,839
Fiscal 2022		9,574
Fiscal 2023		9,227
Fiscal 2024		9,209
Thereafter		60,026
Total undiscounted cash flows		104,253
Less: Present value discount		(19,630)
Total operating lease liabilities	$	84,623

The table above excludes $546 in the undiscounted future minimum lease payments for operating lease liabilities that had not yet commenced for terms up to 5.67 years.

Rent expense was $2,330 and $4,463 for the three and six months ended December 31, 2018, respectively.

Future minimum lease payments under non-cancellable operating leases (with initial or remaining terms in excess of one year) as of June 30, 2019 under ASC 840 were as follows:


Fiscal 2020	$	10,449
Fiscal 2021		11,150
Fiscal 2022		9,500
Fiscal 2023		8,840
Fiscal 2024		8,838
Thereafter		59,401
Total minimum lease payments	$	108,178