Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.20.2
Leases
9 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Leases

3.  Leases

 

We lease office space, buildings, land, vehicles and equipment. Lease agreements with an initial term of 12 months or less are not recorded on the balance sheet.  Instead, we recognize the lease expense as incurred over the lease term.   

 

Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease term from one to five years. The exercise of lease renewal options is at our sole discretion. Some agreements also include options to purchase the leased property. The estimated life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.  

 

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 

Significant Accounting Policy

 

We determine if a contract or arrangement is, or contains, a lease at inception.  Balances related to operating leases are included in Right-of-Use assets in our condensed consolidated balance sheet.  Balances related to financing leases are immaterial and are included in property and equipment, other current liabilities, and long-term lease liability in our condensed consolidated balance sheet.  ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.  

 

ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.  As none of our leases provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.  The ROU asset includes any prepaid lease payments and additional direct costs and excludes lease incentives.  Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.  

 

The following table provides information about the financial statement classification of our lease balances reported within the condensed consolidated balance sheets as of June 30, 2020 and October 1, 2019, in thousands:

 

 

 

June 30,

2020

 

 

October 1,

2019

 

Assets

 

 

 

 

 

 

 

 

Operating lease assets

 

$

5,162

 

 

$

146

 

Finance lease assets

 

 

29

 

 

 

49

 

Total lease assets

 

$

5,191

 

 

$

195

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Operating lease liabilities

 

$

115

 

 

$

99

 

Finance lease liabilities

 

 

12

 

 

 

22

 

Non-current

 

 

 

 

 

 

 

 

Operating lease liabilities

 

 

5,069

 

 

 

15

 

Finance lease liabilities

 

 

19

 

 

 

27

 

Total lease liabilities

 

$

5,215

 

 

$

163

 

 

The following table provides information about the financial statement classification of our lease expenses reported in the condensed consolidated statements of operations for the three and nine months ended June 30, 2020, in thousands:

 

Lease cost

 

Classification

 

Three Months Ended June 30, 2020

 

 

Nine Months Ended June 30, 2020

 

Operating lease cost

 

Selling, general and administrative expenses

 

$

72

 

 

$

187

 

Finance lease cost

 

Selling, general and administrative expenses

 

 

5

 

 

 

20

 

Total lease cost

 

 

 

$

77

 

 

$

207

 

 

Future minimum lease payments under non-cancelable leases as of June 30, 2020 are as follows, in thousands:

 

 

 

Operating leases

 

 

Finance Leases

 

 

Total

 

Remainder of 2020

 

$

85

 

 

$

4

 

 

$

89

 

2021

 

 

323

 

 

 

12

 

 

 

335

 

2022

 

 

317

 

 

 

8

 

 

 

325

 

2023

 

 

312

 

 

 

7

 

 

 

319

 

2024

 

 

311

 

 

 

2

 

 

 

313

 

2025

 

 

297

 

 

 

 

 

 

297

 

Thereafter

 

 

6,944

 

 

 

 

 

 

6,944

 

Total lease payments

 

 

8,589

 

 

 

33

 

 

 

8,622

 

Less:  Interest

 

 

3,405

 

 

 

2

 

 

 

3,407

 

Present value of lease liabilities

 

 

5,184

 

 

 

31

 

 

$

5,215

 

 

 

Operating lease payments include $3.9 million related to options to extend lease terms that are reasonably certain of being exercised.

 

The following table provides information about the remaining lease terms and discount rates applied as of June 30, 2020:

 

 

 

June 30,

2020

 

Weighted average remaining lease term

 

 

 

 

Operating leases

 

24.33 years

 

Finance leases

 

2.89 years

 

Weighted average discount rate

 

 

 

 

Operating leases

 

 

4.17

%

Finance leases

 

 

4.17

%