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Leases

12 Months Ended

Mar. 31, 2020

The Company leases manufacturing facilities, distribution centers, office space, vehicles and other equipment under non-cancellable leases with initial terms typically ranging from 1 to 17 years. At contract inception, the Company reviews the terms of the arrangement to determine if the contract is or contains a lease. Guidance in Topic 842 is used to evaluate whether the contract has an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if it has the right to direct the use of the underlying asset. When determining if a contract has an identified asset, the Company considers both explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the right to obtain substantially all economic benefits from the asset, the Company considers the primary outputs of the identified asset throughout the period of use and determines if it receives greater than 90% of those benefits. When determining if it has the right to direct the use of an underlying asset, the Company considers if it has the right to direct how and for what purpose the asset is used throughout the period of use and if it controls the decision-making rights over the asset.

Lease terms may include options to extend or terminate the lease. The Company exercises its judgment to determine the term of those leases when extension or termination options are present and include such options in the calculation of the lease term when it is reasonably certain that the Company will exercise those options.

The Company has elected to include both lease and non-lease components in the determination of lease payments for all asset classes. Payments made to a lessor for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these, or similar costs, such as utilities, are not included in the calculation of lease payments.

Both finance and operating leases are reflected as liabilities on the commencement date of the lease based on the present value of the lease payments to be made over the lease term. As most of the leases do not provide an implicit rate, the Company has exercised judgment in electing the incremental borrowing rate based on the information available when the lease commences to determine the present value of future payments. Right-of-use assets are valued at the initial measurement of the lease liability, plus any initial direct costs or rent prepayments and reduced by any lease incentives and any deferred lease payments.

Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense includes depreciation, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method.

Short term leases with an initial term of 12 months or less are not presented on the balance sheet and expense is recognized as incurred. The current and non-current portion of operating lease liabilities are reflected in accrued expenses and other liabilities, respectively, on the consolidated balance sheets. The right-of use assets relating to operating and finance leases are reflected in other assets and property, plant and equipment, respectively, on the consolidated balance sheets.

The following table presents lease assets and liabilities:



	March 31, 2020
Operating Leases:
Right-of-use assets	$	70,045
Operating lease current liabilities	21,128
Operating lease non-current liabilities	51,215
Finance Leases:
Right-of-use assets	$	540
Finance lease current liabilities	162
Finance lease non-current liabilities	407

The components of lease expense for the fiscal year ended March 31, 2020 were as follows:



	Classification	March 31, 2020
Operating Leases:
Operating lease cost	Operating expenses	$	28,855
Variable lease cost	Operating expenses	8,238
Short term lease cost	Operating expenses	7,553
Finance Leases:
Depreciation	Operating expenses	$	461
Interest expense	Interest expense	37
Total		$	45,144

The following table presents the weighted average lease term and discount rates for leases as of March 31, 2020:



Operating Leases:
Weighted average remaining lease term (years)		5 years
Weighted average discount rate		5.17%
Finance Leases:
Weighted average remaining lease term (years)		3.5 years
Weighted average discount rate		4.92%

The following table presents future payments due under leases reconciled to lease liabilities as of March 31, 2020:



	Finance Leases		Operating Leases
Year ended March 31,
2021	$	192	$	24,603
2022	195		19,452
2023	154		12,951
2024	104		8,437
2025	15		5,552
Thereafter	10		13,138
Total undiscounted lease payments	670		84,133
Present value discount	101		11,790
Lease liability	$	569	$	72,343

The following table presents supplemental disclosures of cash flow information related to leases for the fiscal year ended March 31, 2020:



	March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	37
Operating cash flows from operating leases	28,593
Financing cash flows from finance leases	461
Supplemental non-cash information on lease liabilities arising from right-of-use assets:
Right-of-use assets obtained in exchange for new finance lease liabilities	$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	11,902

Disclosures related to periods prior to adoption of ASU 2016-02, Leases (Topic 842)

The Company’s future minimum lease payments under operating leases that have noncancelable terms in excess of one year as of March 31, 2019 are as follows:




2020	$	31,483
2021	24,290
2022	16,514
2023	11,596
2024	8,683
Thereafter	23,757
Total minimum lease payments	$	116,323

Rental expense was $40,261 and $38,146 for the fiscal years ended March 31, 2019 and 2018, respectively. Certain operating lease agreements contain renewal or purchase options and / or escalation clauses.

Leases