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Leases

3 Months Ended

Jun. 30, 2019

The Company leases manufacturing facilities, distribution centers, office space, vehicles and other equipment under non-cancellable leases with initial terms typically ranging from 1 to 17 years. At contract inception, the Company reviews the terms of the arrangement to determine if the contract is or contains a lease. Guidance in Topic 842 is used to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if it has the right to direct the use of the underlying asset. When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the right to obtain substantially all economic benefits from the asset, the Company considers the primary outputs of the identified asset throughout the period of use and determines if it receives greater than 90% of those benefits. When determining if it has the right to direct the use of an underlying asset, the Company considers if it has the right to direct how and for what purpose the asset is used throughout the period of use and if it controls the decision-making rights over the asset.

Lease terms may include options to extend or terminate the lease. The Company exercises its judgment to determine the term of those leases when extension or termination options are present and include such options in the calculation of the lease term when it is reasonably certain that the Company will exercise those options.

The Company has elected to include both lease and non-lease components in the determination of lease payments for all asset classes. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.

Both finance and operating leases are reflected as liabilities on the commencement date of the lease based on the present value of the lease payments to be made over the lease term. As most of the leases do not provide an implicit rate, the Company has exercised judgment in electing the incremental borrowing rate based on the information available when the lease commences to determine the present value of future payments. Right-of-use assets are valued at the initial measurement of the lease liability, plus any initial direct costs or rent prepayments and reduced by any lease incentives and any deferred lease payments.

Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense includes depreciation, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.

Short term leases with an initial term of 12 months or less are not presented on the balance sheet and expense is recognized as incurred.

The following table presents lease assets and liabilities and their balance sheet classification:



	Classification	June 30, 2019
Operating Leases:
Right-of-use Assets	Other assets	$	81,627
Operating lease current liabilities	Accrued expenses	23,265
Operating lease non-current liabilities	Other liabilities	60,811
Finance Leases:
Right-of-use Assets	Property, plant, and equipment, net	$	10,906
Finance lease current liabilities	Current portion of debt	10,383
Finance lease non-current liabilities	Non-current portion of debt	557

The components of lease expense for the quarter ended June 30, 2019 were as follows:



	Classification	Quarter ended June 30, 2019
Operating Leases:
Operating lease cost	Operating expenses	$	7,295
Variable lease cost	Operating expenses	1,706
Short term lease cost	Operating expenses	2,184
Finance Leases:
Depreciation	Operating expenses	$	143
Interest expense	Interest expense	12
Total		$	11,340

The following table presents the weighted average lease term and discount rates for our leases:



		Quarter ended June 30, 2019
Operating Leases:
Weighted average remaining lease term (years)		5.2 years
Weighted average discount rate		5.41%
Finance Leases:
Weighted average remaining lease term (years)		3.3 years
Weighted average discount rate		4.91%

The following table presents future payments due under leases reconciled to lease liabilities:



	Quarter ended June 30, 2019
	Finance Leases		Operating Leases
Nine months ended March 31, 2020	$	10,360	$	20,759
Year ended March 31,
2021	219		22,205
2022	197		16,510
2023	150		11,514
2024	107		7,692
Thereafter	26		18,144
Total undiscounted lease payments	11,059		96,824
Present value discount	119		12,748
Lease liability	$	10,940	$	84,076

The following tables present supplemental disclosures of cash flow information related to leases:



	Quarter ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	12
Operating cash flows from operating leases	7,213
Financing cash flows from finance leases	142
Supplemental non-cash information on lease liabilities arising from right-of-use assets:
Right-of-use assets obtained in exchange for new finance lease liabilities	$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	2,628

Leases