Note 11 - Leases and Purchase Commitments

12 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE 11 — LEASES AND PURCHASE COMMITMENTS

Purchase commitments of the Company totaled $29.0 million and $14.3 million as of June 30, 2021 and June 30, 2020, respectively.

The Company leases certain manufacturing facilities along with a small office space, a company vehicle, several forklifts, several small tooling items and various items of office equipment. The Company also acquired buildings, machinery and forklift leases with the acquisition of JSI, as well as one sublease. All but two of the Company’s leases are operating. Leases have a remaining term of one to seven years, some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments.

The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. The rent expense for these leases was immaterial for fiscal 2021.

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments. The adoption of the new lease standard resulted in the recognition of right-of-use (ROU) assets of $10.4 million and lease liabilities of $10.8 million which includes the impact of existing deferred rents and tenant improvement allowances on the consolidated balance sheets as of July 1, 2019 for the Company’s real estate leases. The adoption of the new standard resulted in no material impact to the consolidated statements of operations or consolidated statements of cash flow.

(In thousands)	2021			2020
Operating lease cost	$	2,428		$	2,308
Financing lease cost:
Amortization of right of use assets		291			48
Interest on lease liabilities		91			16
Variable lease cost		10			6
Sublease income		(43	)		-
Total lease cost	$	2,777		$	2,378

Supplemental Cash Flow Information:
(In thousands)	2021		2020
Cash flows from operating leases
Fixed payments - operating cash flows	$	2,412	$	2,296
Liability reduction - operating cash flows	$	1,983	$	1,810
Cash flows from finance leases
Interest - operating cash flows	$	91	$	16
Repayments of principal portion - financing cash flows	$	239	$	39

Operating Leases:	June 30, 2021			June 30, 2020
Total operating right-of-use assets	$	11,579		$	8,663
Accrued expenses (Current liabilities)	$	1,424		$	376
Long-term operating lease liability		10,890			9,021
Total operating lease liabilities	$	12,314		$	9,397
Weighted Average remaining Lease Term (in years)		3.93			4.59
Weighted Average Discount Rate		4.81	%		4.85	%

Finance Leases:	June 30, 2021			June 30, 2020
Buildings under finance leases	$	2,033		$	2,033
Equipment under finance leases		30			-
Accumulated depreciation		(339	)		(48	)
Total finance lease assets, net	$	1,724		$	1,985
Accrued expenses (Current liabilities)	$	263		$	239
Long-term finance lease liability		1,521			1,755
Total finance lease liabilities	$	1,784		$	1,994
Weighted Average remaining Lease Term (in years)		5.78			6.83
Weighted Average Discount Rate		4.86	%		4.86	%

Maturities of Lease Liability:	Operating Lease			Finance Lease			Operating			Net Lease
	Liabilities			Liabilities			Subleases			Commitments
2022	$	3,558		$	342		$	(377	)	$	3,523
2023		3,558			342			(377	)		3,523
2024		3,255			337			(377	)		3,215
2025		2,104			362			(31	)		2,435
2026		803			362			-			1,165
Thereafter		232			304			-			536
Total lease payments	$	13,510		$	2,049		$	(1,162	)	$	14,397
Less: Interest		(1,196	)		(265	)					(1,461	)
Present Value of Lease Liabilities	$	12,314		$	1,784					$	12,936