LEASES

12 Months Ended

Mar. 31, 2024

The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the duration of the lease term. Lease liabilities represent the Company's contractual obligation to make lease payments over the lease term. The Company's policy is to combine lease and non-lease components and to not recognize ROU assets and lease liabilities for short-term leases. Leases with an initial term of twelve months or less are classified as short-term leases. ROU assets are recorded and recognized at commencement for the lease liability amount, plus initial direct costs incurred less lease incentives received. Lease liabilities are recorded at the present value of future lease payments over the lease term at commencement. The discount rate used is generally the Company's estimated incremental borrowing rate unless the lessor's implicit rate is readily determinable. Incremental borrowing rates are calculated periodically to estimate the rate the Company would pay to borrow the funds necessary to obtain an asset of similar value over a similar term. Lease expenses relating to operating leases are recognized on a straight-line basis over the lease term.

The Company has operating leases for administrative, research and development, sales and marketing and manufacturing facilities and equipment under various non-cancelable lease agreements. The Company's leases have remaining lease terms ranging from 1 year to 7 years. The Company's lease terms may include options to extend or terminate the lease where it is reasonably certain that the Company will exercise those options. The Company considers several economic factors when making this determination, including but not limited to, the significance of leasehold improvements incurred in the office space, the difficulty in replacing the asset, underlying contractual obligations, or specific characteristics unique to a particular lease. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company has asset retirement obligations (ARO) to return certain leased facilities to their original condition at the end of the respective lease term. The estimated fair value of these ARO liabilities is recognized in the period in which the liability is generated and a corresponding increase to the carrying value of the related asset is recorded and depreciated over the useful life of the asset. The Company's estimates of its ultimate AROs could change because of changes in regulations, the extent of environmental remediations required, the means of reclamation, cost estimates, exit or disposal activities or time period estimates. ARO liabilities totaled $2.3 million and $2.4 million at March 31, 2024 and 2023, respectively. There was a balance of $0.1 million included in accrued other and a balance of $2.2 million included in other long-term liabilities in the consolidated balance sheets for the fiscal year ended March 31, 2024, and a balance of $2.4 million included other long-term liabilities in the consolidated balance sheets for the fiscal year ended March 31, 2023. Accretion expense related to these liabilities was not material for any periods presented.

Most of the Company's lease agreements contain variable payments, primarily for common area maintenance (CAM), which are expensed as incurred and not included in the measurement of the ROU assets and lease liabilities.

The components of operating lease cost for the fiscal years ended March 31, 2024 and 2023 were as follows (in thousands):


	Fiscal Year Ended March 31,
	2024		2023
Lease cost under long-term operating leases	$	12,160	$	12,352
Lease cost under short-term operating leases	1,626		3,243
Variable lease cost under short-term and long-term operating leases	4,161		3,634
Total operating lease cost	$	17,947	$	19,229

The table below presents supplemental cash flow information related to leases during the fiscal years ended March 31, 2024 and 2023 (in thousands):


	Fiscal Year Ended March 31,
	2024		2023
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,603	$	7,143

At March 31, 2024 and 2023, the weighted average remaining lease term in years and weighted average discount rate were as follows:


	March 31, 2024		March 31, 2023
Weighted average remaining lease term in years - operating leases	5.32		6.07

Weighted average discount rate - operating leases	4.2	%	4.2	%

Future minimum payments under non-cancellable leases at March 31, 2024 are as follows (in thousands):


Year Ending March 31,
2025	$	12,847
2026	11,437
2027	8,399
2028	7,281
2029	6,464
Thereafter	9,301
Total lease payments	$	55,729
Less imputed interest	(5,649)
Present value of lease liabilities	$	50,080