11.

Leases

The Company leases various facilities in North America and Asia under operating leases expiring through August 2033. During the year ended March 31, 2020, the lease of the Company’s 199,000 square foot remanufacturing facility in Mexico commenced, resulting in an increase in the operating lease liability of $16,245,000. The Company has one non-cancellable lease agreement for a building in Mexico, which was executed, but had not commenced as of March 31, 2020, and accordingly was not included in the operating lease assets and operating lease liabilities as of March 31, 2020. Total commitments for this agreement, which expires in December 2032, are $12,538,000. In addition, the Company has a non-cancellable lease agreement for the renewal of a building lease in Canada, which was executed, but had not yet commenced as of March 31, 2020, and accordingly was not included in the operating lease assets and operating lease liabilities as of March 31, 2020. Total commitments for this agreement, which expires in May 2023, are $4,299,000. Both of these operating leases are expected to commence early in the Company’s fiscal year ending March 31, 2021. The Company also has finance leases for certain office and manufacturing equipment, which generally range from three to five years.

The Company determines if an arrangement contains a lease at inception. Lease assets and lease liabilities are recorded based on the present value of lease payments over the lease term, which includes the minimum unconditional term of the lease. Certain of the Company’s leases include options to extend the leases for up to five years. When the Company has the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset, and it is reasonably certain that it will exercise the option, the option is considered in determining the classification and measurement of the lease. The lease assets are recorded net of any lease incentives received. Lease assets are tested for impairment in the same manner as long-lived assets used in operations.

As the rate implicit for each of its leases is not readily determinable, the Company uses its incremental borrowing rate, based on the information available at the lease commencement date, for each of its leases in determining the present value of its expected lease payments. The Company’s incremental borrowing rate is determined by analyzing and combining an applicable risk-free rate, a financial spread adjustment and any lease specific adjustment. Certain leases contain provisions for property-related costs that are variable in nature for which the Company is responsible, including common area maintenance and other property operating services, which are expensed as incurred and not included in the determination of lease assets and lease liabilities. These costs are calculated based on a variety of factors including property values, tax and utility rates, property services fees, and other factors. The Company records rent expense for operating leases, some of which have escalating rent payments, on a straight-line basis over the lease term.

The Company has material nonfunctional currency leases that could have a material impact on the Company’s consolidated statements of operations. As required for other monetary liabilities, lessees shall remeasure a foreign currency-denominated lease liability using the exchange rate at each reporting date, but the lease assets are nonmonetary assets measured at historical rates, which are not affected by subsequent changes in the exchange rates. The Company recorded a loss of $11,710,000 in general and administrative expenses in connection with the remeasurement of foreign currency-denominated lease liabilities during year ended March 31, 2020.

Balance sheet information for leases is comprised of the following:

		March 31, 2020
Leases	Classification
Assets:
Operating	Operating lease assets	$	53,029,000
Finance (1)	Plant and equipment		6,922,000
Total leased assets		$	59,951,000

Liabilities:
Current
Operating	Operating lease liabilities	$	5,104,000
Finance	Other current liabilities		2,059,000
Long-term
Operating	Long-term operating lease liabilities		61,425,000
Finance	Other liabilities		3,905,000
Total lease liabilities		$	72,493,000

(1)	The Company had $5,403,000 in capital lease assets included in plant and equipment at March 31, 2019.

Lease cost recognized in the consolidated statement of operations is comprised of the following:

	Year Ended March 31,
	2020
Lease cost
Operating lease cost (1)	$	8,733,000
Short-term lease cost		1,263,000
Variable lease cost		600,000
Finance lease cost:
Amortization of finance lease assets		1,616,000
Interest on finance lease liabilities		281,000
Total lease cost	$	12,493,000

(1)	During the years ended March 31, 2019 and 2018, the Company incurred total operating lease expenses of $6,188,000 and $4,362,000, respectively.

Maturities of lease commitments at March 31, 2020 were as follows:

Maturity of lease liabilities	Operating Leases			Finance Leases			Total
2021	$	9,536,000		$	2,292,000		$	11,828,000
2022		8,755,000			1,955,000			10,710,000
2023		7,503,000			1,325,000			8,828,000
2024		7,261,000			610,000			7,871,000
2025		7,368,000			243,000			7,611,000
Thereafter		59,837,000			-			59,837,000
Total lease payments		100,260,000			6,425,000			106,685,000
Less amount representing interest		(33,731,000	)		(461,000	)		(34,192,000	)
Present value of lease liabilities	$	66,529,000		$	5,964,000		$	72,493,000

Maturities of lease commitments at March 31, 2019 were as follows:

Maturity of lease liabilities	Operating Leases		Capital Leases			Total
2020	$	7,405,000	$	1,755,000		$	9,160,000
2021		8,206,000		1,311,000			9,517,000
2022		7,862,000		1,040,000			8,902,000
2023		6,726,000		719,000			7,445,000
2024		6,696,000		89,000			6,785,000
Thereafter		65,321,000		-			65,321,000
Total lease payments	$	102,216,000		4,914,000			107,130,000
Less amount representing interest				(406,000	)		(406,000	)
Present value of lease liabilities			$	4,508,000		$	106,724,000

Other information about leases is as follows:

	Year Ended March 31,
	2020
Lease term and discount rate
Weighted-average remaining lease term (years):
Finance leases		3.2
Operating leases		12.0
Weighted-average discount rate:
Finance leases		4.7	%
Operating leases		5.6	%