New Facility Lease Obligation (Notes)

12 Months Ended

Jun. 30, 2016

Leases [Abstract]

New Facility Lease Obligation

New Facility Lease Obligation

On July 17, 2015, the Company entered into a lease agreement, (as amended the “Lease Agreement”), pursuant to which the New Facility is being constructed by the lessor ("Lessor") at its expense, in accordance with agreed upon specifications and plans determined as set forth in the Lease Agreement. Based on the final budget, which reflects substantial completion of the principal design work for the New Facility, the Company estimates that the construction costs for the New Facility will be approximately $55 million to $60 million. The Company recorded an asset related to the New Facility lease obligation included in property, plant and equipment of $28.1 million at June 30, 2016 and an offsetting liability of $28.1 million for the lease obligation in "Other long-term liabilities" on its consolidated balance sheet at June 30, 2016 (see Note 19). Rent expense associated with the portion of the lease allocated to the land in the fiscal year ended June 30, 2016 and 2015 was $0.3 million and $0, respectively. Construction of and relocation to the New Facility is expected to be completed in the third quarter of fiscal 2017.

In conjunction with the Lease Agreement, the Company also entered into a Development Management Agreement (the “DMA”) pursuant to which an affiliate of Stream Realty Partners (“Developer”) has agreed to manage, coordinate, represent, assist and advise the Company on matters concerning the pre-development, development, design, entitlement, infrastructure, site preparation and construction of the New Facility. Pursuant to the DMA, the Company will pay Developer:

•a development fee of 3.25% of all development costs;

•an oversight fee of 2% of any amounts paid to the Company-contracted parties for any oversight by Developer of Company-contracted work;

•an incentive fee, the amount of which will be determined by the parties, if final completion occurs prior to the scheduled completion date; and

•an amount equal to $2.6 million as additional fee in respect of development services.

On June 15, 2016, the Company exercised the purchase option under the Lease Agreement to acquire the partially constructed New Facility. The estimated purchase option exercise price for the New Facility is $58.8 million based on the budget for the completed facility. The actual option exercise price for the partially constructed New Facility will depend upon, among other things, the timing of the closing and the actual costs incurred for construction of the New Facility as of the purchase option closing date.

In addition to the costs to complete the construction of the New Facility, the Company estimates that it will incur $35 million to $39 million for machinery and equipment, furniture and fixtures and related expenditures. As of June 30, 2016, the Company had spent $4.4 million toward the purchase of machinery and equipment for the New Facility. No such capital expenditures were incurred in fiscal 2015. The majority of the capital expenditures associated with machinery and equipment, furniture, fixtures and related expenditures for the New Facility are expected to be incurred in the first half of fiscal 2017.