Leases

3 Months Ended

Sep. 30, 2019

The Company leases certain manufacturing facilities, warehouses, office space, land, and equipment. The Company determines if a contract is a lease or contains an embedded lease at the inception of the agreement. The Company recorded right-of-use assets, included in other assets on the balance sheet, totaling $16,142 as of July 1, 2019. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. The Company's lease liabilities do not include future lease payments related to options to extend or terminate lease agreements as it is not reasonably certain those options will be exercised. Lease expense recorded in the three-month period ended September 30, 2019 under ASC Topic 842 was not materially different from lease expense that would have been recorded under the previous lease accounting standard.

Other information concerning the Company's operating leases accounted for under ASC Topic 842 is as follows (in thousands):



Classification		As of September 30, 2019
Assets
Right-of-use assets	Other assets	$	15,622

Liabilities
Current operating lease liabilities	Accrued expenses	$	1,978
Long-term operating lease liabilities	Other liabilities	15,412
Total lease liabilities		$	17,390



Classification		Three months ended September 30, 2019
Operating lease costs ⁽¹⁾	Cost of sales	$	477
	Selling, general and administrative	223

Sublease income	Other income (expense)	10

Cash paid for amounts included in the measurement of operating lease liabilities	Cash flows from operating activities	647

⁽¹⁾ Includes short-term leases, which are insignificant, and are not included in the lease liability.

The lease liability for operating leases that contain variable escalating rental payments with scheduled increases that are based on the lesser of a stated percentage increase or the cumulative increase in an index, are determined using the stated percentage increase.

The weighted average remaining lease term is 7.97 years. The weighted average discount rate determined based on the Company's incremental borrowing rate is 3.65%, as of September 30, 2019.

Future annual minimum lease payments for the following fiscal years as of September 30, 2019 are as follows:



	Amount
2020 (nine months remaining)	$	1,932
2021	2,495
2022	2,358
2023	2,422
2024	2,563
2025 and thereafter	8,321
Total	20,091
Less imputed interest	(2,701		)
Present value of lease liabilities	$	17,390

The following represents the Company's future minimum rental payments at June 30, 2019 for agreements classified as operating leases under ASC Topic 840:



	Amount
2020	$	2,552
2021	2,541
2022	2,432
2023	2,489
2024	2,649
2025 and thereafter	8,577
Total	$	21,240