Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.21.2
Leases
9 Months Ended
Jun. 30, 2021
Leases [Abstract]  
Leases

 

 

5.  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 (“ROU”) assets in our Condensed Consolidated Balance Sheets.  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 Sheets.  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, in thousands:

 

 

 

June 30,

2021

 

 

September 30,

2020

 

Assets

 

 

 

 

 

 

 

 

Operating lease assets

 

$

8,789

 

 

$

5,124

 

Finance lease assets

 

 

18

 

 

 

26

 

Total lease assets

 

$

8,807

 

 

$

5,150

 

Liabilities

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

Operating lease liabilities

 

$

465

 

 

$

113

 

Finance lease liabilities

 

 

8

 

 

 

11

 

Non-current

 

 

 

 

 

 

 

 

Operating lease liabilities

 

 

8,409

 

 

 

5,048

 

Finance lease liabilities

 

 

10

 

 

 

16

 

Total lease liabilities

 

$

8,892

 

 

$

5,188

 

 

 

The following table provides information about the financial statement classification of our lease expenses reported in the Condensed Consolidated Statements of Operations, in thousands:

 

 

 

 

 

Three Months Ended June 30,

 

 

Nine Months Ended June 30,

 

Lease cost

 

Classification

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating lease cost

 

Cost of sales

 

$

196

 

 

$

56

 

 

$

340

 

 

$

143

 

Operating lease cost

 

Selling, general and administrative expenses

 

 

86

 

 

 

16

 

 

 

170

 

 

 

44

 

Finance lease cost

 

Cost of sales

 

 

1

 

 

 

3

 

 

 

4

 

 

 

14

 

Finance lease cost

 

Selling, general and administrative expenses

 

 

2

 

 

 

2

 

 

 

6

 

 

 

6

 

Short-term lease cost

 

Cost of sales

 

 

107

 

 

 

 

 

 

183

 

 

 

 

Total lease cost

 

 

 

$

392

 

 

$

77

 

 

$

703

 

 

$

207

 

 

Future minimum lease payments under non-cancelable leases, including leases that are executed but not yet effective, as of June 30, 2021 are as follows, in thousands:

 

 

 

Operating leases

 

 

Finance Leases

 

 

Total

 

Remainder of 2021

 

$

266

 

 

$

3

 

 

$

269

 

2022

 

 

1,064

 

 

 

8

 

 

 

1,072

 

2023

 

 

1,057

 

 

 

6

 

 

 

1,063

 

2024

 

 

1,037

 

 

 

2

 

 

 

1,039

 

2025

 

 

1,024

 

 

 

 

 

 

1,024

 

Thereafter

 

 

9,741

 

 

 

 

 

 

9,741

 

Total lease payments

 

 

14,189

 

 

 

19

 

 

 

14,208

 

Less:  Interest

 

 

5,315

 

 

 

1

 

 

 

5,316

 

Present value of lease liabilities

 

 

8,874

 

 

 

18

 

 

$

8,892

 

 

Operating lease payments include $6.4 million related to optional lease extension periods for multiple leases that are not yet exercisable but are reasonably certain of being exercised.

 

The following table provides information about the remaining lease terms and discount rates applied:

 

 

 

June 30,

2021

 

Weighted average remaining lease term

 

 

 

 

Operating leases

 

17.05 years

 

Finance leases

 

2.33 years

 

Weighted average discount rate

 

 

 

 

Operating leases

 

 

4.17

%

Finance leases

 

 

4.17

%