Leases

9 Months Ended

Mar. 31, 2020

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 nine month period ended March 31, 2020 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 March 31, 2020

Assets

Right-of-use assets

Other assets

14,675

Liabilities

Current operating lease liabilities

Accrued expenses

1,998

Long-term operating lease liabilities

Other liabilities

14,397

Total lease liabilities

16,395


Classification				Three Months Ended March 31, 2020		Nine Months Ended March 31, 2020
Operating lease costs ⁽¹⁾	Cost of sales	$	491	$	1,441
	Selling, general and administrative	211		654

Sublease income	Other income (expense)	10		29

Cash paid for amounts included in the measurement of operating lease liabilities	Cash flows from operating activities	653		1,955

⁽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 7.52 years. The weighted average discount rate determined based on the Company's incremental borrowing rate is 3.65%, as of March 31, 2020.

Future annual minimum lease payments for the following fiscal years as of March 31, 2020 are as follows:


	Amount
Remainder of 2020	$	646
2021	2,517
2022	2,360
2023	2,410
2024	2,536
2025 and thereafter	8,316
Total	18,785
Less imputed interest	(2,390)
Present value of lease liabilities	$	16,395

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