Leases

12 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Leases

Under Topic 842, the Company evaluates contracts for lease accounting at contract inception and assesses lease classification at the lease commencement date. Operating leases are included in operating lease right-of-use ("ROU") assets, operating lease liabilities and operating lease liabilities - long-term on the Company's consolidated balance sheets. Finance leases are included in property, plant and equipment, finance lease liabilities and finance lease liabilities-long-term on the consolidated balance sheets. The Company recognizes a ROU asset and corresponding lease obligation liability at the lease commencement date where the lease obligation liability is measured at the present value of the minimum lease payments. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate at lease commencement. The Company uses an interest rate commensurate with the interest rate to borrow on a collateralized basis over a similar term with an amount equal to the lease payments. Operating leases are primarily related to offices, research and development facilities, sales and marketing facilities, and manufacturing facilities. In addition, long-term supply agreements to lease gas tank equipment and purchase industrial gases are accounted for as operating leases. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. For operating leases, the amortization of the ROU asset and the accretion of its lease obligation liability result in a single straight-line expense recognized over the lease term. The finance lease is related to the RMB 400.0 million of lease financing of the JV Company with YinHai Leasing Company and The Export-Import Bank of China. See Note 5 - Bank Borrowings for details. The Company does not record leases on the consolidated balance sheet with a term of one year or less.

The components of the Company’s operating and finance lease expenses are as follows for the period presented (in thousands):

	Fiscal Year Ended June 30, 2020
Operating leases:
Fixed rent expense	$	6,077
Variable rent expense	797
Finance lease:
Amortization of equipment	2,839
Interest	2,783
Short-term leases:
Short-term lease expenses	306
Total lease expenses	$	12,802

Supplemental balance sheet information related to the Company’s operating and finance leases is as follows (in thousands, except lease term and discount rate):

	June 30, 2020
Operating Leases:
ROU assets associated with operating leases	$	32,948
Finance Lease:
Property, plant and equipment, gross	$	104,374
Accumulated depreciation	86,540
Property, plant and equipment, net	$	17,834
Weighted average remaining lease term (in years)
Operating leases	9.57
Finance lease	2.72
Weighted average discount rate
Operating leases	4.45		%
Finance lease	5.46		%

Supplemental cash flow information related to the Company’s operating and finance lease is as follows (in thousands):

	Fiscal Year Ended June 30, 2020
Cash paid from amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,241
Operating cash flows from finance lease	$	2,783
Financing cash flows from finance lease	$	11,028

Future minimum lease payments are as follows as of June 30, 2020 (in thousands):

	Operating Leases			Finance Leases
2021	$	5,695		$	17,273
2022	5,223			16,428
2023	4,385			11,907
2024	3,938			—
2025	3,517			—
Thereafter	20,687			—
Total minimum lease payments	43,445			45,608
Less amount representing interest	(9,032		)	(3,508		)
Total lease liabilities	$	34,413		$	42,100

Prior to the adoption of the new lease standard, future minimum lease payments as of June 30, 2019 were as follows (in thousands):

Year ending June 30,	Operating Leases		Finance Leases
2020	$	4,357	$	14,219
2021	1,741		17,799
2022	1,164		16,928
2023	894		12,269
2024	1,002		—
Thereafter	149		—
Total minimum lease payments	9,307		61,215
Less amount representing interest	—		(6,479		)
Total lease liabilities	$	9,307	$	54,736

Leases

Leases

Under Topic 842, the Company evaluates contracts for lease accounting at contract inception and assesses lease classification at the lease commencement date. Operating leases are included in operating lease right-of-use ("ROU") assets, operating lease liabilities and operating lease liabilities - long-term on the Company's consolidated balance sheets. Finance leases are included in property, plant and equipment, finance lease liabilities and finance lease liabilities-long-term on the consolidated balance sheets. The Company recognizes a ROU asset and corresponding lease obligation liability at the lease commencement date where the lease obligation liability is measured at the present value of the minimum lease payments. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate at lease commencement. The Company uses an interest rate commensurate with the interest rate to borrow on a collateralized basis over a similar term with an amount equal to the lease payments. Operating leases are primarily related to offices, research and development facilities, sales and marketing facilities, and manufacturing facilities. In addition, long-term supply agreements to lease gas tank equipment and purchase industrial gases are accounted for as operating leases. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. For operating leases, the amortization of the ROU asset and the accretion of its lease obligation liability result in a single straight-line expense recognized over the lease term. The finance lease is related to the RMB 400.0 million of lease financing of the JV Company with YinHai Leasing Company and The Export-Import Bank of China. See Note 5 - Bank Borrowings for details. The Company does not record leases on the consolidated balance sheet with a term of one year or less.

The components of the Company’s operating and finance lease expenses are as follows for the period presented (in thousands):

	Fiscal Year Ended June 30, 2020
Operating leases:
Fixed rent expense	$	6,077
Variable rent expense	797
Finance lease:
Amortization of equipment	2,839
Interest	2,783
Short-term leases:
Short-term lease expenses	306
Total lease expenses	$	12,802

Supplemental balance sheet information related to the Company’s operating and finance leases is as follows (in thousands, except lease term and discount rate):

	June 30, 2020
Operating Leases:
ROU assets associated with operating leases	$	32,948
Finance Lease:
Property, plant and equipment, gross	$	104,374
Accumulated depreciation	86,540
Property, plant and equipment, net	$	17,834
Weighted average remaining lease term (in years)
Operating leases	9.57
Finance lease	2.72
Weighted average discount rate
Operating leases	4.45		%
Finance lease	5.46		%

Supplemental cash flow information related to the Company’s operating and finance lease is as follows (in thousands):

	Fiscal Year Ended June 30, 2020
Cash paid from amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,241
Operating cash flows from finance lease	$	2,783
Financing cash flows from finance lease	$	11,028

Future minimum lease payments are as follows as of June 30, 2020 (in thousands):

	Operating Leases			Finance Leases
2021	$	5,695		$	17,273
2022	5,223			16,428
2023	4,385			11,907
2024	3,938			—
2025	3,517			—
Thereafter	20,687			—
Total minimum lease payments	43,445			45,608
Less amount representing interest	(9,032		)	(3,508		)
Total lease liabilities	$	34,413		$	42,100

Prior to the adoption of the new lease standard, future minimum lease payments as of June 30, 2019 were as follows (in thousands):

Year ending June 30,	Operating Leases		Finance Leases
2020	$	4,357	$	14,219
2021	1,741		17,799
2022	1,164		16,928
2023	894		12,269
2024	1,002		—
Thereafter	149		—
Total minimum lease payments	9,307		61,215
Less amount representing interest	—		(6,479		)
Total lease liabilities	$	9,307	$	54,736