Rental Expense and Lease Commitments

12 Months Ended

Mar. 31, 2020

Operating Leased Assets [Line Items]

Leases of Lessee Disclosure [Text Block]

18.     Leases

Transition

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASC 842"). ASC 842 requires the recognition of lease ROU assets and lease liabilities by lessees for those leases classified as operating leases and additional disclosures regarding the nature of the Company's leases, significant judgments made, and amounts recognized in the financial statements relating to those leases. The Company adopted this standard effective April 1, 2019 under the modified retrospective method whereas comparative period information is not restated. In addition, the Company elected the package of practical expedients which permits the Company to not reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, and to not reassess initial direct costs for any existing leases. The Company also elected the practical expedient to not

separate lease and non-lease components for all classes of underlying assets and made an accounting policy election to not record leases with an initial term of twelve months or less on the balance sheet for all classes of underlying assets.

As a result of the adoption of ASC 842, the Company recognized an initial operating lease ROU assets of $35,553,000 on April 1, 2019 with a corresponding lease liability of the same amount. The standard did not materially impact the Company's Consolidated Statement of Operations or the Consolidated Statements of Cash Flows for the fiscal year ending March 31, 2020.

Nature of leases

The Company's leases are classified as operating leases and consist of manufacturing facilities, sales offices, distribution centers, warehouses, vehicles, and equipment. For leases with terms greater than twelve months, at lease commencement the Company recognizes a ROU asset and a lease liability. The initial lease liability is recognized at the present value of remaining lease payments over the lease term. Leases with an initial term of twelve months or less are not recorded on the Company's Consolidated Balance Sheet. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term. Additionally, because the Company has elected to not separate lease and non-lease components, variable costs also include payments to the landlord for common area maintenance, real estate taxes, insurance, and other operating expenses.

The Company's leases have lease terms ranging from 1 to 15 years, some of which include options to extend or terminate the lease. The exercise of lease renewal options is at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term. The Company’s lease agreements do not contain material residual value guarantees or any material restrictive covenants.

As of March 31, 2020, the Company does not have any significant additional operating leases that have not yet commenced.

Significant assumptions or judgments

The discount rate implicit within each lease is generally not readily determinable, therefore, the Company uses its estimated incremental borrowing rate in determining the present value of lease payments. The incremental borrowing rate is determined based on the Company’s recent debt issuances, lease term, and the currency in which lease payments are made.

The following table presents the weighted average remaining lease term and discount rate:

	March 31, 2020
Weighted-average remaining lease term (in years)	6.74
Weighted-average discount rate	4.05	%

Amounts recognized on the financial statements

The following table illustrates the balance sheet classification for ROU assets and lease liabilities as of March 31, 2020 (in thousands):

	Balance sheet classification	March 31, 2020
Assets	Other assets	$	38,125
Current	Accrued liabilities	6,924
Non-current	Other non current liabilities	31,629
Total liabilities		$	38,553

Operating lease expense of $8,869,000 for the fiscal year ending March 31, 2020 is included in income from operations on the Consolidated Statements of Operations. Short-term lease expense, sublease income, and variable lease expenses are not material for the fiscal year ending March 31, 2020. Rental expense for the years ended March 31, 2019 and 2018 was $12,248,000 and $13,020,000, respectively, under ASC 840 (prior to the adoption of ASC 842).

Other lease disclosures

At March 31, 2020, the maturities of operating lease liabilities were as follows (in thousands):

Year:	March 31, 2020
2021	$	8,285
2022	7,756
2023	6,853
2024	4,662
2025	4,190
Thereafter	12,136
Total undiscounted lease payments	$	43,882
Less: imputed interest	$	5,329
Present value of lease liabilities	$	38,553

Supplemental cash flow information related to operating leases is as follows (in thousands):

	Year ended March 31, 2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	8,593
ROU assets obtained in exchange for new operating lease liabilities	$	10,589