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Leases | 6 Months Ended
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Jan. 31, 2020
Leases [Abstract] |
Leases | Note 3—Leases On August 1, 2019, the Company adopted Accounting Standards Update No. 2016-02, Leases (Topic 842), and the amendments thereto, related to the accounting for leases (collectively referred to as "ASC 842"). ASC 842 establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on its balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. Entities have the option to continue to apply historical accounting under Topic 840, the previously applicable standard, including its disclosure requirements, in comparative periods presented in the year of adoption. An entity that elects this option will recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption instead of the earliest period presented. The Company elected to apply the optional ASC 842 transition provisions beginning on August 1, 2019. Accordingly, the Company will continue to apply Topic 840 prior to August 1, 2019, including Topic 840 disclosure requirements, in the comparative periods presented. The Company elected the package of practical expedients for all its leases that commenced before August 1, 2019. In addition, the Company elected not to apply the recognition requirements of ASC 842 for its short-term leases. The Company's leases primarily consist of operating leases for office space. These leases have remaining terms from one to six years. net2phone-UCaaS also has operating leases for office equipment. Certain of these leases include renewal options that may be exercised and/or options to terminate the lease. The Company has concluded that it is not reasonably certain that it would exercise the options to extend the lease or terminate the lease. The adoption of ASC 842 resulted in the recognition of operating lease liabilities of $12.4 million and operating ROU assets of the same amount as of August 1, 2019 based on the present value of the remaining minimum rental payments associated with the Company's leases. As the Company's leases do not provide an implicit rate, nor is one readily available, the Company used its incremental borrowing rate based on information available at August 1, 2019 to determine the present value of its future minimum rental payments. net2phone has equipment leases that were classified as capital leases under Topic 840 and are finance leases under ASC 842. net2phone is also the lessor in various equipment leases that were classified as sales-type capital leases under Topic 840, that are classified as sales-type finance leases under ASC 842. The assets and liabilities related to these finance leases are not material to the Company's consolidated balance sheets. On March 26, 2018, the Company completed a pro rata distribution of the common stock that the Company held in the Company's former subsidiary, Rafael Holdings, Inc. ("Rafael") to the Company's stockholders of record as of the close of business on March 13, 2018. The Company leases office space and parking in Rafael's building and parking garage located at 520 Broad St, Newark, New Jersey. The Company also leases office space in Israel from Rafael. The Newark lease expires in April 2025 and the Israel lease expires in July 2025. In the three months ended January 31, 2020 and 2019, the Company incurred lease cost of $0.5 million and $0.5 million, respectively, and in the six months ended January 31, 2020 and 2019, the Company incurred lease cost of $0.9 million and $0.9 million, respectively, in connection with the Rafael leases, which is included in operating lease cost in the table below. Supplemental disclosures related to the Company's operating leases were as follows:
|  | Three Months Ended January 31, 2020 |  |  | Six Months Ended January 31, 2020 |
|  | (in thousands) |
Operating lease cost |  | $ | 712 |  |  | $ | 1,423 |
Short-term lease cost |  |  | 75 |  |  |  | 133 |
Total lease cost |  | $ | 787 |  |  | $ | 1,556 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows from operating leases |  | $ | 685 |  |  | $ | 1,369 |
|  | January 31, 2020 |
Weighted-average remaining lease term-operating leases |  |  | 4.6 years |
Weighted-average discount rate-operating leases |  |  | 3.12 | %
The Company's aggregate operating lease liability was as follows:
|  | January 31, 2020 |
|  | (in thousands) |
Operating lease liabilities included in "Other current liabilities" |  | $ | 2,424 |
Operating lease liabilities included in noncurrent liabilities |  |  | 8,731 |
Total |  | $ | 11,155 |
Future minimum maturities of operating lease liabilities were as follows:
|  | Twelve-month period ending January 31, |
|  |  | (in thousands) |
2021 |  | $ | 2,743 |
2022 |  |  | 2,624 |
2023 |  |  | 2,377 |
2024 |  |  | 1,882 |
2025 |  |  | 1,888 |
Thereafter |  |  | 511 |
Total lease payments |  |  | 12,025 |
Less imputed interest |  |  | (870 | )
Total operating lease liabilities |  | $ | 11,155 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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