Leases

3 Months Ended

Sep. 30, 2020

The Company leases certain manufacturing facilities, warehouses, office space, land, and equipment. The Company determines if a contract is a lease or contains an embedded lease at the inception of the agreement. The Company recorded right-of-use assets, included in other assets on the balance sheet, totaling $16,142 as of July 1, 2019. Leases with an initial term of 12 months or less are not recorded on the unaudited interim condensed consolidated balance sheet. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. The Company's lease liabilities do not include future lease payments related to options to extend or terminate lease agreements as it is not reasonably certain those options will be exercised.

Other information concerning the Company's operating leases accounted for under ASC Topic 842, Leases is as follows (in thousands):


Classification		As of September 30, 2020		As of June 30, 2020
Assets
Right-of-use assets	Other assets	$	13,867	$	14,315

Liabilities
Current operating lease liabilities	Accrued expenses	$	1,983	$	2,006
Long-term operating lease liabilities	Other liabilities	13,568		14,013
Total lease liabilities		$	15,551	$	16,019


Classification		Three Months Ended September 30, 2020		Three months ended September 30, 2019
Operating lease costs (1)	Cost of sales	$	508	$	477
	Selling, general and administrative	214		223

Sublease income	Other income (expense)	10		10

Cash paid for amounts included in the measurement of operating lease liabilities	Cash flows from operating activities	656		647

(1) Includes short-term leases, which are insignificant, and are not included in the lease liability.

The lease liability for operating leases that contain variable escalating rental payments with scheduled increases that are based on the lesser of a stated percentage increase or the cumulative increase in an index, are determined using the stated percentage increase.

The weighted average remaining lease term for the three months ended September 30, 2020 and 2019 was 7.17 years and 7.97 years, respectively . The weighted average discount rate determined based on the Company's incremental borrowing rate is 3.65%, as of September 30, 2020 and 2019.

Future annual minimum lease payments for the following fiscal years as of September 30, 2020 are as follows:


	Amount
Remainder of 2021	$	1,904
2022	2,403
2023	2,454
2024	2,582
2025	2,310
2026 and thereafter	6,014
Total	17,667
Less imputed interest	(2,116)
Present value of lease liabilities	$	15,551