Lease Obligations

3 Months Ended

May 31, 2021

(20)	Lease Obligations

We account for leases in accordance with ASC 842 “Leases” (“ASC 842”). We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration.

We have operating leases for office equipment, as well as offices, warehouses, and other facilities used for our operations. We also have finance leases comprised primarily of computer hardware and machinery and equipment. Our leases have remaining lease terms of less than 1 year to 10 years, some of which include renewal options. We consider these renewal options in determining the lease term used to establish our right-of-use assets and lease liabilities when it is determined that it is reasonably certain that the renewal option will be exercised. The Company had no short-term leases during the three months ended May 31, 2021.

Refer to Note 7 for supplemental cash flow information related to leases.

The components of lease cost for the three months ended May 31, 2021 and 2020 were as follows:

	Three months ended May 31,
	2021		2020
Operating lease cost (a) (c)	$	341	$	243
Finance lease cost:
Amortization of right of use assets (a)		121		169
Interest on lease liabilities (b)		4		9
Total finance lease cost	$	125	$	178

(a)

Recorded within Selling, General and administrative, Engineering and technical support, and Cost of sales on the Unaudited Consolidated Statement of Operations and Comprehensive Income.

(b)

Recorded within Interest and bank charges on the Unaudited Consolidated Statement of Operations and Comprehensive Income.

(c)

Includes immaterial amounts related to variable rent expense.

Supplemental balance sheet information related to leases is as follows:

	May 31, 2021			February 28, 2021
Operating Leases
Operating lease, right of use assets	$	4,559		$	4,572
Total operating lease right of use assets	$	4,559		$	4,572
Accrued expenses and other current liabilities	$	1,162		$	1,119
Operating lease liabilities, less current portion		3,540			3,582
Total operating lease liabilities	$	4,702		$	4,701
Finance Leases
Property, plant, and equipment, gross	$	2,503		$	2,503
Accumulated depreciation		(1,926	)		(1,805	)
Total finance lease right of use assets	$	577		$	698
Accrued expenses and other current liabilities	$	366		$	418
Finance lease liabilities, less current portion		229			302
Total finance lease liabilities	$	595		$	720
Weighted Average Remaining Lease Term
Operating leases	5.9 years			6.0 years
Finance leases	1.8 years			1.8 years
Weighted Average Discount Rate
Operating leases		4.40	%		4.49	%
Finance leases		3.87	%		3.87	%

Maturities of lease liabilities on May 31 of each of the succeeding years are as follows:

	Operating Leases		Finance Leases
2021	$	1,319		374
2022		1,022		193
2023		756		40
2024		558		—
2025		397		—
Thereafter		1,196		—
Total lease payments		5,248		607
Less imputed interest		546		12
Total	$	4,702		595

As of May 31, 2021, the Company has not entered into any lease agreements that have not yet commenced.

The Company owns and occupies buildings as part of its operations. Certain space within these buildings may, from time to time, be leased to third parties from which the Company earns rental income as lessor. This leased space is recorded within property, plant, and equipment and was not material to the Company's Consolidated Balance Sheets at May 31, 2021 and February 28, 2021. Rental income earned by the Company for the three months ended May 31, 2021 and 2020 was $164 and $186, respectively, and is recorded within Other income (expense).