Leases

9 Months Ended

Feb. 28, 2021

LEASES

The Company determines if an arrangement is a lease at inception of the contract. The Company has operating leases for buildings, primarily for office space, R&D, manufacturing and warehousing.

Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Many of the lease agreements contain renewal or termination clauses that are factored into the determination of the lease term if it is reasonably certain that these options would be exercised. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The following table presents supplemental balance sheet information related to leases:


(in thousands)	Balance Sheet Location	Feb 28, 2021		May 31, 2020
Assets
Operating lease ROU asset	Other assets	$	9,945	$	10,146
Liabilities
Current operating lease liabilities	Other current liabilities	2,363		2,077
Non-current operating lease liabilities	Other long-term liabilities	7,940		8,345
Total lease liabilities		$	10,303	$	10,422

The interest rate implicit in lease agreements is typically not readily determinable, and as such the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate is defined as the interest the Company would pay to borrow on a collateralized basis, considering factors such as length of lease term. The following table presents the weighted average remaining lease term and discount rate:


	Feb 28, 2021
Weighted average remaining term (in years)	4.35
Weighted average discount rate	3.8	%

The maturities of the lease liabilities for each of the following fiscal years is:


(in thousands)	Feb 28, 2021
Remainder of 2021	$	675
2022	2,733
2023	2,784
2024	2,206
2025	1,451
2026 and thereafter	1,318
Total lease payments	$	11,167
Less: Imputed Interest	864
Total lease obligations	$	10,303
Less: Current portion of lease obligations	2,363
Long-term lease obligations	$	7,940

During the three months ended February 28, 2021 and February 29, 2020, the Company recognized $0.8 million and $0.9 million of operating lease expense, respectively, which includes immaterial short-term leases. During the nine months ended February 28, 2021 and February 29, 2020, the Company recognized $2.4 million and $2.5 million of operating lease expense, respectively, which includes immaterial short-term leases. The expenses on the Consolidated Statement of Operations were classified as follows:


	Three Months Ended				Nine Months Ended
(in thousands)	Feb 28, 2021		Feb 29, 2020		Feb 28, 2021		Feb 29, 2020
Cost of sales	$	209	$	297	$	602	$	856
Research and development	197		192		682		388
Sales and marketing	111		100		304		298
General and administrative	277		336		828		927
	$	794	$	925	$	2,416	$	2,469

The following table presents supplemental cash flow and other information related to leases for the nine months ended:


(in thousands)	Feb 28, 2021		Feb 29, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	2,020	$	1,767
ROU assets obtained in exchange for lease liabilities
Operating leases	$	1,585	$	5,595