Leases

6 Months Ended

Dec. 31, 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 and six-month period ended December 31, 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 December 31, 2019
Assets
Right-of-use assets	Other assets	$	15,270

Liabilities
Current operating lease liabilities	Accrued expenses	$	2,027
Long-term operating lease liabilities	Other liabilities	14,991
Total lease liabilities		$	17,018



Classification		Three Months Ended December 31, 2019		Six Months Ended December 31, 2019
Operating lease costs ⁽¹⁾	Cost of sales	$	473	$	950
	Selling, general and administrative	220		443

Sublease income	Other income (expense)	9		19

Cash paid for amounts included in the measurement of operating lease liabilities	Cash flows from operating activities	655		1,302

⁽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 7.73 years. The weighted average discount rate determined based on the Company's incremental borrowing rate is 3.65%, as of December 31, 2019.

Future annual minimum lease payments for the following fiscal years as of December 31, 2019 are as follows:



	Amount
Remainder of 2020	$	1,309
2021	2,541
2022	2,384
2023	2,439
2024	2,576
2025 and thereafter	8,323
Total	19,572
Less imputed interest	(2,554		)
Present value of lease liabilities	$	17,018

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