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Leases

3 Months Ended

Sep. 30, 2020

Leases [Abstract]

Leases

LEASESThe Company has entered into various lease agreements for office space and other equipment as lessee. At contract inception, the Company determines that a contract contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. If a contract contains a lease, the Company recognizes a right-of-use asset and a lease liability on the consolidated balance sheet at lease commencement. The Company has elected a practical expedient to make an accounting policy not to record short-term leases on the consolidated balance sheet, defined as leases with an initial term of 12 months or less that do not contain purchase options that the lessee is reasonably certain to elect.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term as the Company has control over an economic resource and is benefiting from the use of the asset. Lease liabilities represent the Company’s obligation to make payments for that right of use. Right-of-use assets and lease liabilities are determined by recognizing the present value of future lease payments using the Company’s incremental borrowing rate, which is the rate we would have to pay to borrow on a collateralized basis based upon information available at the lease commencement date. The right-of-use asset is measured at the commencement date by totaling the amount of the initial measurement of the lease liability, adding any lease payments made to the lessor at or before the commencement date, subtracting any lease incentives received, and adding any initial direct costs incurred by the Company.

When lease terms include renewal or termination options, the Company determines the lease term as the noncancelable period of the lease, plus periods covered by an option to extend the lease if the Company is reasonably certain to exercise the option. The Company considers an option to be reasonably certain to be exercised by the Company when a significant economic incentive exists.

The Company has lease agreements with lease and nonlease components. The Company elected the practical expedient to make an accounting policy election by class of underlying asset, to not separate nonlease components from the associated lease components and instead account for each separate lease component and its associated nonlease components as a single lease component. The Company has applied this accounting policy election to all asset classes.

The majority of the Company’s leases are operating leases related to office space. The Company leases office facilities in the United States in San Francisco, California; San Diego, California; Centennial, Colorado; Jacksonville, Florida; Overland Park, Kansas; Wilmington, North Carolina; and Des Moines, Iowa under noncancelable operating leases that expire at various dates through July 2029. The Company recognizes lease expense for operating leases on a straight-line basis over the respective lease term. The Company has operating leases with remaining lease terms of less than one year to nine years.

The Company has entered into noncancelable agreements to sublease portions of its office facilities to unrelated third parties. Sublease rental income is recorded as a reduction of rent expense in the accompanying consolidated statement of comprehensive income. Sublease rental income was $0.1 million for the three months ended September 30, 2020.

Operating lease expense was $1.9 million for the three months ended September 30, 2020, recorded in general and administrative operating costs and expenses in the consolidated statements of comprehensive income.

The Company has not entered into any leases which have not yet commenced as of September 30, 2020.

Right-of-Use Asset and Lease Liability—The right-of-use assets and lease liabilities were as follows as of September 30, 2020:

(in thousands)			Balance Sheet Classification						Amount
Assets
Operating leases			Operating lease right-of-use assets						$	30,142
Finance leases			Property and equipment - net						157
Total lease right-of-use assets									30,299
Liabilities
Current
Operating leases			Operating lease liabilities - current						4,685
Finance leases			Other current liabilities						168
Non-current
Operating leases			Operating lease liabilities						37,600
Finance leases			Other liabilities						48
Total lease liabilities									$	42,501

Lease Costs—The components of lease costs for the three months ended September 30, 2020, were as follows:

(in thousands)			Amount
Finance lease costs(1)			$	66
Operating lease costs(2)			1,927
Short-term lease costs			67
Variable lease costs(3)			265
Sublease income			(65)
Total net lease costs			$	2,260

(1) Primarily consists of amortization of finance lease right-of-use assets and an immaterial amount of interest on finance lease liabilities recorded in operating costs and expenses and interest expense, net in the consolidated statements of comprehensive income.

(2) Recorded in operating costs and expenses in the consolidated statements of comprehensive income.

(3) Variable lease costs not included in the measurement of the lease liability or right-of-use asset as they are not based on an index or rate. Primarily represents common area maintenance charges and real estate taxes recorded in operating costs and expenses in the consolidated statements of comprehensive income.

Supplemental Information—Supplemental information related to leases was as follows as of and for the three months ended September 30, 2020:

(in thousands)			Operating Leases						Finance leases						Total
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from leases			$	1,451					$	3					$	1,454
Financing cash flows from leases			—						68						68
Right-of-use assets obtained in exchange for new lease liabilities			$	1,478					$	—					$	1,478

			Operating Leases						Finance leases
Weighted-average remaining lease term (in years)			7.55						1.17
Weighted-average discount rate			9.64		%				5.22		%

Maturities of Lease Liabilities—As of September 30, 2020, remaining maturities of lease liabilities for each of the next five fiscal years and thereafter are as follows:

(in thousands)						Operating leases						Finance leases						Total
Remainder of 2021						$	5,731					$	156					$	5,887
2022						8,493						59						8,552
2023						7,936						5						7,941
2024						8,298						—						8,298
2025						8,294						—						8,294
2026						5,997						—						5,997
Thereafter						15,066						—						15,066
Total undiscounted lease payments						59,815						220						60,035
Less: interest						(17,530)						(4)						(17,534)
Present value of lease liabilities						$	42,285					$	216					$	42,501

The following table summarizes the future annual minimum lease obligations under non-cancelable operating leases at June 30, 2020, under the previous lease accounting standard ASC 840, Leases (in thousands):

2021			$	8,781
2022			8,497
2023			7,991
2024			8,353
2025			8,306
Thereafter			21,262
Total minimum lease payments			$	63,190

Leases

LEASESThe Company has entered into various lease agreements for office space and other equipment as lessee. At contract inception, the Company determines that a contract contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. If a contract contains a lease, the Company recognizes a right-of-use asset and a lease liability on the consolidated balance sheet at lease commencement. The Company has elected a practical expedient to make an accounting policy not to record short-term leases on the consolidated balance sheet, defined as leases with an initial term of 12 months or less that do not contain purchase options that the lessee is reasonably certain to elect.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term as the Company has control over an economic resource and is benefiting from the use of the asset. Lease liabilities represent the Company’s obligation to make payments for that right of use. Right-of-use assets and lease liabilities are determined by recognizing the present value of future lease payments using the Company’s incremental borrowing rate, which is the rate we would have to pay to borrow on a collateralized basis based upon information available at the lease commencement date. The right-of-use asset is measured at the commencement date by totaling the amount of the initial measurement of the lease liability, adding any lease payments made to the lessor at or before the commencement date, subtracting any lease incentives received, and adding any initial direct costs incurred by the Company.

When lease terms include renewal or termination options, the Company determines the lease term as the noncancelable period of the lease, plus periods covered by an option to extend the lease if the Company is reasonably certain to exercise the option. The Company considers an option to be reasonably certain to be exercised by the Company when a significant economic incentive exists.

The Company has lease agreements with lease and nonlease components. The Company elected the practical expedient to make an accounting policy election by class of underlying asset, to not separate nonlease components from the associated lease components and instead account for each separate lease component and its associated nonlease components as a single lease component. The Company has applied this accounting policy election to all asset classes.

The majority of the Company’s leases are operating leases related to office space. The Company leases office facilities in the United States in San Francisco, California; San Diego, California; Centennial, Colorado; Jacksonville, Florida; Overland Park, Kansas; Wilmington, North Carolina; and Des Moines, Iowa under noncancelable operating leases that expire at various dates through July 2029. The Company recognizes lease expense for operating leases on a straight-line basis over the respective lease term. The Company has operating leases with remaining lease terms of less than one year to nine years.

The Company has entered into noncancelable agreements to sublease portions of its office facilities to unrelated third parties. Sublease rental income is recorded as a reduction of rent expense in the accompanying consolidated statement of comprehensive income. Sublease rental income was $0.1 million for the three months ended September 30, 2020.

Operating lease expense was $1.9 million for the three months ended September 30, 2020, recorded in general and administrative operating costs and expenses in the consolidated statements of comprehensive income.

The Company has not entered into any leases which have not yet commenced as of September 30, 2020.

Right-of-Use Asset and Lease Liability—The right-of-use assets and lease liabilities were as follows as of September 30, 2020:

(in thousands)			Balance Sheet Classification						Amount
Assets
Operating leases			Operating lease right-of-use assets						$	30,142
Finance leases			Property and equipment - net						157
Total lease right-of-use assets									30,299
Liabilities
Current
Operating leases			Operating lease liabilities - current						4,685
Finance leases			Other current liabilities						168
Non-current
Operating leases			Operating lease liabilities						37,600
Finance leases			Other liabilities						48
Total lease liabilities									$	42,501

Lease Costs—The components of lease costs for the three months ended September 30, 2020, were as follows:

(in thousands)			Amount
Finance lease costs(1)			$	66
Operating lease costs(2)			1,927
Short-term lease costs			67
Variable lease costs(3)			265
Sublease income			(65)
Total net lease costs			$	2,260

(1) Primarily consists of amortization of finance lease right-of-use assets and an immaterial amount of interest on finance lease liabilities recorded in operating costs and expenses and interest expense, net in the consolidated statements of comprehensive income.

(2) Recorded in operating costs and expenses in the consolidated statements of comprehensive income.

(3) Variable lease costs not included in the measurement of the lease liability or right-of-use asset as they are not based on an index or rate. Primarily represents common area maintenance charges and real estate taxes recorded in operating costs and expenses in the consolidated statements of comprehensive income.

Supplemental Information—Supplemental information related to leases was as follows as of and for the three months ended September 30, 2020:

(in thousands)			Operating Leases						Finance leases						Total
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from leases			$	1,451					$	3					$	1,454
Financing cash flows from leases			—						68						68
Right-of-use assets obtained in exchange for new lease liabilities			$	1,478					$	—					$	1,478

			Operating Leases						Finance leases
Weighted-average remaining lease term (in years)			7.55						1.17
Weighted-average discount rate			9.64		%				5.22		%

Maturities of Lease Liabilities—As of September 30, 2020, remaining maturities of lease liabilities for each of the next five fiscal years and thereafter are as follows:

(in thousands)						Operating leases						Finance leases						Total
Remainder of 2021						$	5,731					$	156					$	5,887
2022						8,493						59						8,552
2023						7,936						5						7,941
2024						8,298						—						8,298
2025						8,294						—						8,294
2026						5,997						—						5,997
Thereafter						15,066						—						15,066
Total undiscounted lease payments						59,815						220						60,035
Less: interest						(17,530)						(4)						(17,534)
Present value of lease liabilities						$	42,285					$	216					$	42,501

The following table summarizes the future annual minimum lease obligations under non-cancelable operating leases at June 30, 2020, under the previous lease accounting standard ASC 840, Leases (in thousands):

2021			$	8,781
2022			8,497
2023			7,991
2024			8,353
2025			8,306
Thereafter			21,262
Total minimum lease payments			$	63,190

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- References

No definition available.

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance 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

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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

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