LEASES

AND COMMITMENTS

The Company has operating leases related to land, office space, warehouse space and equipment. All of the Company’s leases have been assessed to be operating leases. Renewal options are included in the lease terms to the extent the Company is reasonably certain to exercise the option. The exercise of lease renewal options is at the Company’s sole discretion. The amounts disclosed in our consolidated balance sheet as of

March 1, 2020,

pertaining to the right-of-use assets and lease liabilities, are measured on our current expectations of exercising our available renewal options. The incremental borrowing rate represents the Company’s ability to borrow on a collateralized basis over a term similar to the lease term. The leases typically contain renewal options for periods ranging from

one

year to

years and require the Company to pay real estate taxes and other operating costs. The latest land lease expiration is

2068

assuming exercise of all applicable renewal options by the Company. The Company’s existing leases are

not

subject to any restrictions or covenants which preclude its ability to pay dividends, obtain financing or exercise its available renewal options.

Future minimum lease payments under non-cancellable operating leases as of

March 1, 2020

are as follows:

Fiscal Year:
2021	$	152
2022		90
2023		61
2024		61
2025		-
Thereafter		161
Total undiscounted operating lease payments		525
Less imputed interest		(105	)
Present value of operating lease payments	$	420

The above payment schedule includes renewal options that the Company is reasonably likely to exercise. Leases with an initial term of

months or less are

not

recorded on the Company’s balance sheet. The Company recognizes lease expense for leases on a straight-line basis over the terms of the leases. The above payment schedule does

not

include lease payments of

$334

2021

for the Company’s idle facility in Fullerton, California that have been accrued on the consolidated balance sheets in accrued liabilities.

During the

2020

fiscal year, the Company’s operating lease expense was

$318.

Cash payments of

$309,

pertaining to operating leases, are reflected in the consolidated cash flow statement under cash flows from operating activities.

The following table sets forth the right-of-use assets and operating lease liabilities as of

March 1, 2020:

Operating right-of-use assets	$	420

Operating lease liabilities	$	152
Long-term operating lease liabilities		268
Total operating lease liabilities	$	420

The Company’s weighted average remaining lease term for its operating leases is

5.87

years.

These non-cancelable leases have the following payment schedule:

Fiscal Year	Amount
2021	$	152
2022		90
2023		61
2024		61
2025		-
Thereafter		-
	$	364

The above payment schedule does

not

include renewal options that have

not

been committed to. An additional

$161

would be included in the period after

2024

if the Company included renewal periods that the Company deems likely to renew.

Rental expenses, inclusive of real estate taxes and other costs, were

$368,

$346

and

$432

for the

2020,

2019

and

2018

fiscal years, respectively.

December 2018,

PATC entered into a Development Agreement with the City of Newton, Kansas and the Board of County Commissioners of Harvey County, Kansas. Pursuant to this agreement, PATC agreed to construct and operate an additional manufacturing facility of approximately

90,000

square feet for the design, development and manufacture of advanced composite materials and parts, structures and assemblies for aerospace. PATC further agreed to equip the facility through the purchase of machinery, equipment and furnishings and to create additional new full-time employment of specified levels during a

five

-year period. In exchange for these agreements, the City and the County agreed to lease to PATC

three

acres of land at the Newton, Kansas Airport, in addition to the

eight

acres previously leased to PATC by the City and County. The City and County further agreed to provide financial and other assistance toward the construction of the additional facility as set forth in the Development Agreement. The Company estimates the total cost of the additional facility to be approximately

$21

million, and the Company expects to complete the construction of the additional facility in the

second

half of the

2020

calendar year. As of

March 1, 2020,

the Company had

$997

in equipment purchase obligations and

$7,647

of construction-in-progress related to the additional facility. On

July 16, 2019,

PATC was merged into the Company and ceased to exist, and the Company assumed the rights and obligations of PATC, including the rights and obligations of PATC under the Development Agreement. (See Note

Consolidated Financial Statements)