Leases

6 Months Ended

Sep. 30, 2019

The Company is a lessee in several noncancellable operating leases, primarily real estate facilities for office space and for transportation and office equipment. The Company accounts for leases in accordance with Topic 842 (see Note 1) and determines if an arrangement is a lease or contains a lease at contract inception. ROU assets are included in other assets, short-term lease liabilities are included in accrued and other current liabilities, and long-term lease liabilities are included in other non-current liabilities on the Company's unaudited condensed consolidated balance sheet. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For the Company's operating leases, the Company accounts for the lease and non-lease components as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at lease commencement date. Topic 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if the rate cannot be readily determined, its incremental borrowing rate. As the rate implicit in the lease is not readily determinable for the Company's operating leases, the Company generally uses an incremental borrowing rate as the discount rate for the lease. The Company's incremental borrowing rate is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because the Company does not generally borrow in a collateralized basis, it uses its understanding of what its collateralized credit rating would be as an input to deriving an appropriate incremental borrowing rate. The operating lease right-of-use asset includes any lease payments made and excludes lease incentives.

The Company's lease arrangements comprise of operating leases with various expiration dates through June 30, 2031. The lease term for all of the Company’s leases includes the noncancellable period of the lease. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into our determination of the duration of the lease arrangement.

The Company's leases do not contain any material residual value guarantees.

For the three and six months ended September 30, 2019, the total operating lease costs were $3.6 million and $6.9 million, respectively, which included short-term lease costs and sublease income. Total variable lease costs were immaterial during the three and six months ended September 30, 2019. The total operating and variable lease costs were included in cost of goods sold, marketing and selling, research and development, and general and administrative in the Company's unaudited condensed consolidated statement of operations.

As of September 30, 2019, the weighted-average remaining lease term was 4 years, and the weighted-average discount rate was 2.8%.

For the three and six months ended September 30, 2019, cash paid for amounts included in the measurement of operating lease liabilities was $3.3 million and $6.4 million, respectively, and right-of-use assets obtained in exchange for new operating lease liabilities was $1.5 million and $4.9 million, respectively.

Future lease payments included in the measurement of lease liabilities as of September 30, 2019 for the following five fiscal years and thereafter are as follows (in thousands):



	Operating Lease
Remaining 2020	$	6,900
2021	11,204
2022	9,185
2023	5,600
2024	1,358
Thereafter	4,102
Total lease payments	38,349
Less interest	(2,412		)
Present value of lease liabilities	$	35,937

Future minimum lease payments, as defined under the previous lease accounting guidance of ASC Topic 840 under our non-cancelable operating leases as of March 31, 2019 were as follows (in thousands):



Years Ending March 31,	Operating Lease
2020	$	11,849
2021	10,002
2022	7,882
2023	5,111
2024	1,130
Thereafter	3,646
Total lease payments	$	39,620