16. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2016

Notes to Financial Statements

COMMITMENTS AND CONTINGENCIES (IN THOUSANDS, EXCEPT EARNINGS PER SHARE AND NUMBER OF SHARES)

The Company leases certain of its facilities and equipment under long-term agreements expiring at various dates through fiscal year 2016 and thereafter. Certain of these leases require the Company to pay real estate taxes and insurance and provide for escalation of lease costs based on certain indices.

Future minimum payments under capital leases and non-cancelable operating leases and net rental income under non-cancelable sub-leased properties as of June 30, 2016 were as follows:

For the Year Ending June 30,	Capital Leases		Operating Leases		Sub-lease Rental (Income)			Net Operating Leases
2017	$	235	$	598	$	(24	)	$	574
2018		212		269		(24	)		245
2019		156		204		(24	)		180
Thereafter		135		229		-			229
Total future minimum lease payments	$	738	$	1,300	$	(72	)	$	1,228
Less: amount representing interest		-
Present value of net minimum lease payments		738
Less: current portion of capital lease obligations		235
Long-term obligations under capital leases		503

Future minimum payments under capital leases and non-cancelable operating leases and net rental income under non-cancelable sub-leased properties as of June 30, 2015 were as follows:

For the Year Ending June 30,	Capital Leases		Operating Leases		Sub-lease Rental (Income)			Net Operating Leases
2016	$	197	$	803	$	(128	)	$	675
2017		199		671		(41	)		630
2018		169		279		(24	)		255
Thereafter		107		2,060		-			2,060
Total future minimum lease payments	$	672	$	3,813	$	(193	)	$	3,620
Less: amount representing interest		-
Present value of net minimum lease payments		672
Less: current portion of capital lease obligations		197
Long-term obligations under capital leases		475

The Company purchased equipment under the capital lease agreements with rates ranging from 1.6% to 7.5%. These agreements mature ranging from July 2016 to May 2020.

Total rental expense on all operating leases, cancelable and non-cancelable, amounted to $743 and $784 in fiscal years 2016 and 2015 respectively.

Trio-Tech (Malaysia) Sdn. Bhd. has a capital lease for the purchase of equipment and other related infrastructure costs amounting to RM 1,153, or approximately $287 based on the exchange rate on June 30, 2016 published by the Monetary Authority of Singapore, as compared to RM 33, or approximately $9 for the last fiscal year.

Trio-Tech Tianjin Co. Ltd has a capital lease for the purchase of equipment and other related infrastructure costs amounting to RMB 597, or approximately $93 based on the exchange rate on June 30, 2016 published by the Monetary Authority of Singapore, as compared to nil for last fiscal year.

Deposits with banks in China are not insured by the local government or agency, and are consequently exposed to risk of loss. The Company believes the probability of a bank failure, causing loss to the Company, is remote.

The Company is, from time to time, the subject of litigation claims and assessments arising out of matters occurring in its normal business operations.  In the opinion of management, resolution of these matters will not have a material adverse effect on the Company’s financial statements.