Annual report pursuant to Section 13 and 15(d)

Note 7 - Leases

v3.20.2
Note 7 - Leases
12 Months Ended
Jun. 30, 2020
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]

Note 7. Leases: 

 

As a lessee, the company leases offices, labs, and manufacturing facilities, as well as vehicles, copiers, and other equipment. The Company adopted ASU No. 2016-02 and related standards (collectively ASC 842, Leases), which replaced previous lease accounting guidance, on July 1, 2019. 


The Company recognizes operating lease expense on a straight-line basis over the lease term. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region. During fiscal year 2020, the Company recognized $3.4 million in variable lease expense in the Consolidated Statements of Earnings and Comprehensive Income.  During fiscal year 2020, the Company also recognized $13.0 million relating to fixed lease expense in the Consolidated Statements of Earnings and Comprehensive Income. 

 

The following table summarizes the balance sheet classification of the Company’s operating leases, amounts of right of use assets and lease liabilities, the weighted average remaining lease term, and the weighted average discount rate for the Company’s operating leases (asset and liability amounts are in thousands):

 

 

Balance Sheet Classification

 

As of:

June 30,

2020

 

Operating leases:

         

Operating lease right of use assets

Right of Use Asset

  $ 71,465  
           

Current operating lease liabilities

Operating lease liabilities current

  $ 9,535  

Noncurrent operating lease liabilities

Operating lease liabilities

    67,248  
Total operating lease liabilities     $ 76,783  
 

 

       
Weighted average remaining lease term (in years):       8.72  
 

 

       
Weighted average discount rate:       4.40 %

 

The following table summarizes the cash paid for amounts included in the measurement of operating lease liabilities and right of use assets obtained in exchange for new operating lease liabilities for the year ended  June 30, 2020 (in thousands):

 

   

For the year ended June 30, 2020

 

Cash amounts paid on operating lease liabilities(1)

  $ 12,763  
         

Right of use assets obtained in exchange for lease liabilities

    1,758  

 

(1) Total cash paid for the Company's operating leases during the year ended June 30, 2020 include cash amounts paid on operating lease liabilities and variable lease expenses. Cash flow impacts from right of use assets and lease liabilities are presented net on the cash flow statement in changes in other operating activity.  

 

The following table summarizes payments by date for the Company’s operating leases, which is then reconciled to our total lease obligation (in thousands):

 

   

June 30, 2020

Operating

Leases

 

2021

  $ 12,590  

2022

    12,113  

2023

    11,296  

2024

    10,317  

2025

    9,388  

Thereafter

    37,316  

Total

  $ 93,020  
Less: Amounts representing interest     16,237  
Total lease obligations     76,783  

 

Certain leases include one or more options to renew, with terms that extend the lease term up to five years. The Company includes option to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. In addition, certain leases contain fair value purchase and termination options with an associated penalty. In general, the Company is not reasonably certain to exercise such options.

 

Disclosures related to periods prior to adoption of new lease standard:

 

At June 30, 2019, aggregate net minimum rental commitments under non-cancelable leases having an initial or remaining term of more than one year are payable as follows (in thousands):

 

   

Operating

Leases

 

2020

  $ 13,707  

2021

    13,469  

2022

    13,154  

2023

    12,716  

2024

    11,392  

Thereafter

    51,895  

Total

  $ 116,333  

 

Total rent expense was approximately $12.9 million, $10.8 million, and $9.8 million for the years ended June 30, 2019, 2018, and 2017, respectively.