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4. Leases

12 Months Ended

Jun. 30, 2020

4.	Leases

On July 1, 2019, we adopted Topic 842 and elected the available practical expedient to recognize the cumulative effect of initially adopting the standard as an adjustment to the opening balance sheet of the period of adoption (i.e., July 1, 2019). We also elected other available practical expedients and will not separate lease components from non-lease components for office leases, or reassess historical lease classification, whether existing or expired contracts are or contain leases, or the initial direct costs for existing leases as of July 1, 2019. The consolidated balance sheets and results from operations for reporting periods beginning after July 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under Topic 840.

Adoption of the standard resulted in the recording of net operating and financing lease ROU assets and corresponding operating and financing lease liabilities of $984,000 and $1,114,000, respectively, on July 1, 2019. The adoption of the standard did not materially affect the consolidated statements of operations and had no impact on cash flows.

Our leases include office buildings for facilities worldwide and car leases in Germany, which are all classified as operating leases. We also have financing leases related to office equipment in the United States. On October 1, 2019 we entered into a lease agreement for an office in Hyderabad, India, which replaced and expanded our existing office space there. In May 2020 we entered into an extension to our office lease for our corporate headquarters in Irvine, California. The amendment extends the term of the lease by 13 months through January 2022.

We determine if an arrangement is a lease at inception. Certain leases include renewal options that are under the Company's sole discretion. The renewal options were included in the ROU asset and lease liability calculation if it is reasonably assured that we will exercise the option. As our leases generally do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Components of lease expense and supplemental cash flow information:

	Year Ended June 30,
	2020
Components of lease expense		(In thousands)
Operating lease cost	$	1,579
Financing lease cost	$	14

Supplemental cash flow information
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,131
Cash paid for amounts included in the measurement of financing lease liabilities	$	11

Right-of-use assets obtained in exchange for lease obligation	$	1,857

The weighted-average remaining lease term is 1.3 years. The weighted-average discount rate is 6.14 percent.

Maturities of lease liabilities as of June 30, 2020 were as follows:

Years ending June 30,	Operating			Financing
	(In thousands)
2021	$	1,472		$	9
2022		1,106			9
2023		376			9
2024		274			3
2025		72			–
Total remaining lease payments		3,300			30
less: imputed interest		(261	)		–
Lease liability	$	3,039		$	30
Reported as:
Current liabilities	$	1,264		$	9
Non-current liabilities	$	1,775		$	21

The lease liabilities and ROU assets as of June 30, 2020 include leases assumed in the acquisitions of Maestro and Intrinsyc if the remaining lease term at the acquisition date was determined to exceed one year. Refer to Note 2 above for further information on the acquisitions. As of June 30, 2020, the ROU assets totaled $3,345,000 and were recorded in other assets in the consolidated balance sheet.