Note 13 - Leases

6 Months Ended

May 31, 2021

Notes to Financial Statements

Leases [Text Block]

13 ) Leases

The Company accounts for leases of modular buildings to certain customers as sales-type leases. These leases have terms of up to

36

months and are collateralized by a security interest in the related modular building. The lessee has a bargain purchase option available at the end of the lease term. A minimum lease receivable is recorded net of unearned interest income and profit on sale at the time the Company's obligation to the lessee is complete. Profit related to the sale of the building is recorded upon fulfillment of the Company's obligation to the lessee.

Modular buildings held for lease by the Modular Buildings segment are recorded at cost. Amortization of each modular building is calculated over the useful life of the building. Estimated useful life is

three

to

five

years. Lease revenue is accounted for on a straight-line basis over the term of the related lease agreement. Lease income for modular buildings is included in sales on the consolidated statements of operations.

The components related to sales-type leases on

May 31, 2021,

and

November 30, 2020,

are as follows:

	May 31, 2021		November 30, 2020
Minimum lease receivable, current	$	11,117	$	29,002
Unearned interest income, current		-		(650	)
Net investment in sales-type leases, current	$	11,117	$	28,352

There was

no

sales activity related to sales-type leases for the

three

and

six

months ended

May 31, 2021,

and

May 31, 2020.

Future minimum lease receipts from sales-type leases are as follows:

Year Ending November 30,	Amount
2021	$	11,117
Total	$	11,117

The Company determines if an arrangement is a lease at inception of a contract. The nature of the Company's finance and operating leases at this time are office equipment, mainly copiers, with terms of

12

to

60

months. Finance and operating leases are included in other assets as finance or operating lease right-of-use (“ROU”) assets on the Condensed Consolidated Balance Sheets while current lease liabilities are included accrued expenses. The long-term portion of finance and operating lease liabilities are shown as long-term liabilities on the Condensed Consolidated Balance Sheets.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Finance and operating lease ROU assets and liabilities are recognized at the commencement date based on the present value payments over the lease term. As most of the Company's leases do

not

provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The lease terms

may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term. For finance leases, the ROU asset is amortized on a straight-basis over the shorter of the useful life or lease term and interest expense is recorded using the effective interest method.

The Company has copier lease agreements with lease and non-lease components and has elected the practical expedient

not

to separate lease and non-lease components for this asset class. The Company has also elected

not

to recognize lease liabilities and ROU assets for short-term leases. The Company recognizes variable costs that depend on usage in profit or loss as they are incurred.

The components of operating leases on the Condensed Consolidated Balance Sheets on

May 31, 2021

are as follows:

	May 31, 2021		November 30, 2020
Operating lease right-of-use assets	$	53,983	$	27,879
Current portion of operating lease liabilities	$	12,539	$	9,537
Long-term portion of operating lease liabilities		41,444		18,342
Total operating lease liabilities	$	53,983	$	27,879

The components of finance leases on the Condensed Consolidated Balance Sheets on

May 31, 2021

are as follows:

	May 31, 2021
Finance lease right-of-use assets (net of amortization)	$	7,392
Current portion of finance lease liabilities	$	1,296
Long-term portion of finance lease liabilities		6,111
Total finance lease liabilities	$	7,407

The Company included

$53,983

of operating and

$7,392

of finance lease right-of-use assets net of amortization in other assets on

May 31, 2021,

compared to

$27,879

and

$0,

on

November 30, 2020,

respectively. Current portion of operating lease liabilities of

$12,539

and

$1,296

of finance lease liabilities were included in accrued expenses on

May 31, 2021

compared to

$9,537

and

$0

on

November 30, 2020,

respectively.

$41,444

of long-term operating lease liabilities and

$6,111

of long-term finance lease liabilities were included in the long-term liability portion of the Condensed Consolidated Balance Sheets as of

May 31, 2021,

compared to

$18,342

and

$0,

respectively, on

November 30, 2020.

The Company recorded

$5,909

and

$11,989

of operating lease costs in the

three

and

six

months ended

May 31, 2021,

respectively, which included variable costs tied to usage, compared to

$5,481

and

$13,632

for the

three

and

six

months ended

May 31, 2020.

The Company recorded

$119

of amortization and

$30

of interest expense in the

three

and

six

months ended

May 31, 2021

compared to

$0

for the same periods of fiscal

2021.

The Company's operating leases carry a weighted average lease term of

54

months and have a weighted average discount rate of

5.50%.

The Company's finance lease carries a lease term of

62

months and uses a discount rate of

4.75%.

Future maturities of operating lease liabilities are as follows:

Year Ending November 30,
2021	$	7,457
2022		14,914
2023		12,344
2024		11,162
2025		9,532
2026 and thereafter		4,766
Total lease payments		60,174
Less imputed interest		(6,191	)
Total operating lease liabilities	$	53,983

Future maturities of finance lease liabilities are as follows:

Year Ending November 30,
2021	$	810
2022		1,619
2023		1,619
2024		1,619
2025		1,619
2026 and thereafter		1,080
Total lease payments		8,367
Less imputed interest		(960	)
Total finance lease liabilities	$	7,407