Leases (Notes)

9 Months Ended

Mar. 31, 2020

Leases

The Company enters into lease arrangements for real estate, construction equipment and information technology equipment in the normal course of business. Real estate leases accounted for approximately 86% of all right-of-use assets as of March 31, 2020. Most real estate and information technology equipment leases generally have fixed payments that follow an agreed upon payment schedule and have remaining lease terms ranging from less than a year to 16 years. Construction equipment leases generally have "month-to-month" lease terms that automatically renew as long as the equipment remains in use.

The Company incurred $2.2 million of impairments to right-of-use assets related to leased office space that was closed in connection with a restructuring plan, see Note 10 – Restructuring Costs for additional information.

The components of lease expense in the Condensed Consolidated Statements of Income are as follows:



		Three Months Ended		Nine Months Ended
		March 31, 2020		March 31, 2020
Lease expense	Location of Expense in Statements of Income	(in thousands)
Operating lease expense	Cost of revenues and selling, general and administrative expenses	$	3,229	$	9,601
Short-term lease expense⁽¹⁾	Cost of revenues	9,808		30,423
Total lease expense		$	13,037	$	40,024


(1)	Primarily represents the lease expense of construction equipment that is subject to month-to-month rental agreements with expected rental durations of less than one year.

The future undiscounted lease payments, as reconciled to the discounted operating lease liabilities presented in the Company's Condensed Consolidated Balance Sheets, were as follows:



	March 31, 2020
Maturity Analysis:	(in thousands)
Remainder of Fiscal 2020	$	2,892
Fiscal 2021	8,767
Fiscal 2022	6,209
Fiscal 2023	4,572
Fiscal 2024	2,992
Thereafter	11,922
Total future operating lease payments	37,354
Less: imputed interest	(6,055		)
Net present value of future lease payments	31,299
Less: current portion of operating lease liabilities	8,639
Non-current operating lease liabilities	$	22,660

The following is a summary of the weighted average remaining operating lease term and weighted average discount rate as of March 31, 2020:



Weighted-average remaining lease term (in years)	6.1 years
Weighted-average discount rate	5.6	%

Supplemental cash flow information related to leases is as follows:



	Nine Months Ended
	March 31, 2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	9,773
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	36,564

During the third quarter, the Company received leasehold improvements of $2.4 million from a lessor as a tenant incentive. This incentive is considered to be a non-cash investing activity.