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Leases

9 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

LEASES

The 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 condensed 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 condensed 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 Diego, California; Centennial, Colorado; Jacksonville, Florida; Overland Park, Kansas; Wilmington, North Carolina; Des Moines, Iowa; and Oakland, California 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 eight 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 general and administrative operating costs and expenses in the condensed consolidated statements of comprehensive income. Sublease rental income was $0.4 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and $0.6 million and $0.2 million for the nine months ended March 31, 2021 and 2020, respectively.

Operating lease expense was $2.0 million and $5.9 million for the three and nine months ended March 31, 2021, respectively, recorded in general and administrative operating costs and expenses in the condensed consolidated statements of comprehensive income.

Right-of-Use Asset and Lease Liability—The right-of-use assets and lease liabilities were as follows as of March 31, 2021:

(in thousands)			Balance Sheet Classification						Amount
Assets
Operating leases			Operating lease right-of-use assets						$	30,381
Finance leases			Property and equipment - net						228
Total lease right-of-use assets									30,609
Liabilities
Current
Operating leases			Operating lease liabilities - current						5,130
Finance leases			Other current liabilities						202
Non-current
Operating leases			Operating lease liabilities						37,716
Finance leases			Other liabilities						75
Total lease liabilities									$	43,123

Lease Costs—The components of lease costs were as follows for the periods presented:

(in thousands)			Three Months Ended March 31, 2021						Nine Months Ended March 31, 2021
Finance lease costs(1)			$	69					$	194
Operating lease costs(2)			1,980						5,859
Short-term lease costs			42						168
Variable lease costs(3)			201						915
Sublease income			(403)						(638)
Total net lease costs			$	1,889					$	6,498

(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 condensed consolidated statements of comprehensive income.

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

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

Supplemental Information—Supplemental information related to leases was as follows as of and for the nine months ended March 31, 2021:

(in thousands)			Operating Leases						Finance leases						Total
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from leases			$	5,045					$	8					$	5,053
Financing cash flows from leases			—						201						201
Right-of-use assets obtained in exchange for new lease liabilities			$	3,632					$	194					$	3,826

			Operating Leases						Finance leases
Weighted-average remaining lease term (in years)			7.05						1.31
Weighted-average discount rate			9.63		%				6.51		%

Maturities of Lease Liabilities—As of March 31, 2021, 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						$	2,145					$	65					$	2,210
2022						8,946						196						9,142
2023						8,478						27						8,505
2024						8,857						—						8,857
2025						8,870						—						8,870
2026						6,591						—						6,591
Thereafter						15,115						—						15,115
Total undiscounted lease payments						59,002						288						59,290
Less: interest						16,156						11						16,167
Present value of lease liabilities						$	42,846					$	277					$	43,123

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

LEASES

The 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 condensed 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 condensed 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 Diego, California; Centennial, Colorado; Jacksonville, Florida; Overland Park, Kansas; Wilmington, North Carolina; Des Moines, Iowa; and Oakland, California 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 eight 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 general and administrative operating costs and expenses in the condensed consolidated statements of comprehensive income. Sublease rental income was $0.4 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively, and $0.6 million and $0.2 million for the nine months ended March 31, 2021 and 2020, respectively.

Operating lease expense was $2.0 million and $5.9 million for the three and nine months ended March 31, 2021, respectively, recorded in general and administrative operating costs and expenses in the condensed consolidated statements of comprehensive income.

Right-of-Use Asset and Lease Liability—The right-of-use assets and lease liabilities were as follows as of March 31, 2021:

(in thousands)			Balance Sheet Classification						Amount
Assets
Operating leases			Operating lease right-of-use assets						$	30,381
Finance leases			Property and equipment - net						228
Total lease right-of-use assets									30,609
Liabilities
Current
Operating leases			Operating lease liabilities - current						5,130
Finance leases			Other current liabilities						202
Non-current
Operating leases			Operating lease liabilities						37,716
Finance leases			Other liabilities						75
Total lease liabilities									$	43,123

Lease Costs—The components of lease costs were as follows for the periods presented:

(in thousands)			Three Months Ended March 31, 2021						Nine Months Ended March 31, 2021
Finance lease costs(1)			$	69					$	194
Operating lease costs(2)			1,980						5,859
Short-term lease costs			42						168
Variable lease costs(3)			201						915
Sublease income			(403)						(638)
Total net lease costs			$	1,889					$	6,498

(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 condensed consolidated statements of comprehensive income.

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

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

Supplemental Information—Supplemental information related to leases was as follows as of and for the nine months ended March 31, 2021:

(in thousands)			Operating Leases						Finance leases						Total
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from leases			$	5,045					$	8					$	5,053
Financing cash flows from leases			—						201						201
Right-of-use assets obtained in exchange for new lease liabilities			$	3,632					$	194					$	3,826

			Operating Leases						Finance leases
Weighted-average remaining lease term (in years)			7.05						1.31
Weighted-average discount rate			9.63		%				6.51		%

Maturities of Lease Liabilities—As of March 31, 2021, 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						$	2,145					$	65					$	2,210
2022						8,946						196						9,142
2023						8,478						27						8,505
2024						8,857						—						8,857
2025						8,870						—						8,870
2026						6,591						—						6,591
Thereafter						15,115						—						15,115
Total undiscounted lease payments						59,002						288						59,290
Less: interest						16,156						11						16,167
Present value of lease liabilities						$	42,846					$	277					$	43,123

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

X

- 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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X

- 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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