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Note 7 - Leases

12 Months Ended

Jun. 30, 2021

Note 7. Leases:

As a lessee, the company leases offices, labs, and manufacturing facilities, as well as vehicles, copiers, and other equipment. The Company adopted ASU No. 2016-02 and related standards (collectively ASC 842, Leases), which replaced previous lease accounting guidance, on July 1, 2019.

The Company recognizes operating lease expense on a straight-line basis over the lease term. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on its lease term and the economic environment of the applicable country or region. During fiscal year 2021, the Company recognized $3.6 million in variable lease expense in the Consolidated Statements of Earnings and Comprehensive Income. During fiscal year 2021, the Company also recognized $32.5 million relating to fixed lease expense in the Consolidated Statements of Earnings and Comprehensive Income.

The following table summarizes the balance sheet classification of the Company’s operating leases, amounts of right of use assets and lease liabilities, the weighted average remaining lease term, and the weighted average discount rate for the Company’s operating leases (asset and liability amounts are in thousands):

	Balance Sheet Classification	As of: June 30, 2021
Operating leases:
Operating lease right of use assets⁽¹⁾	Right of Use Asset	$	73,834

Current operating lease liabilities⁽¹⁾	Operating lease liabilities current	$	11,602
Noncurrent operating lease liabilities⁽¹⁾	Operating lease liabilities		67,625
Total operating lease liabilities		$	79,227

Weighted average remaining lease term (in years):			7.97

Weighted average discount rate:			3.93	%

(1) The right of use asset, current operating lease liabilities, and noncurrent lease liabilities on the Consolidated Balance Sheet exclude a definitive agreement entered into by the Company in June 2021 for a 25,000 square foot facility in Dublin, Ireland for the next 25 years with annual rental impact of $0.3 million. The lease will commence during fiscal 2022 after construction is completed by the landlord. As the lease has not commenced as of June 30, 2021, the related asset and liability were not recorded.

The following table summarizes the cash paid for amounts included in the measurement of operating lease liabilities and right of use assets obtained in exchange for new operating lease liabilities for the year ended June 30, 2021 (in thousands):

	For the year ended June 30, 2021
Cash amounts paid on operating lease liabilities(1)	$	13,492

Right of use assets obtained in exchange for lease liabilities		12,144

(1) Total cash paid for the Company's operating leases during the year ended June 30, 2021 include cash amounts paid on operating lease liabilities and variable lease expenses. Cash flow impacts from right of use assets and lease liabilities are presented net on the cash flow statement in changes in other operating activity.

The following table summarizes payments by date for the Company’s operating leases, which is then reconciled to our total lease obligation (in thousands):

	June 30, 2021 Operating Leases
2022	$	14,349
2023		13,371
2024		11,840
2025		10,780
2026		10,120
Thereafter		32,331
Total	$	92,791
Less: Amounts representing interest		13,564
Total lease obligations		79,227

Certain leases include one or more options to renew, with terms that extend the lease term up to five years. The Company includes option to renew the lease as part of the right of use lease asset and liability when it is reasonably certain the Company will exercise the option. In addition, certain leases contain fair value purchase and termination options with an associated penalty. In general, the Company is not reasonably certain to exercise such options.