Leases

3 Months Ended

Sep. 30, 2020

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 condensed consolidated balance sheets. Finance leases are included in property, plant and equipment, finance lease liabilities and finance lease liabilities-long-term on the condensed 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 condensed consolidated balance sheets with a term of one year or less.

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



	Three Months Ended September 30,
	2020		2019
Operating Leases:
Fixed rent expense	$	1,688	$	1,281
Variable rent expense	203		207
Finance Lease:
Amortization of equipment	559		1,093
Interest	615		740
Short-term leases
Short-term lease expenses	58		75
Total lease expenses	$	3,123	$	3,396

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



	September 30, 2020			June 30, 2020
Operating Leases:
ROU assets associated with operating leases	$	32,407		$	32,948
Finance Lease:
Property, plant and equipment, gross	$	108,387		$	104,374
Accumulated depreciation	(90,251		)	(86,540		)
Property, plant and equipment, net	$	18,136		$	17,834

Weighted average remaining lease term (in years)
Operating leases	9.46			9.57
Finance lease	2.47			2.72

Weighted average discount rate
Operating leases	4.83		%	4.45		%
Finance lease	5.46		%	5.46		%

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



	Three Months Ended September 30,
	2020		2019
Cash paid from amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,642	$	1,160
Operating cash flows from finance lease	$	615	$	740
Financing cash flows from finance lease	$	3,989	$	1,691

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



	Operating Leases			Finance Leases
The remainder of 2021	$	4,216		$	13,366
2022	5,401			17,059
2023	4,481			12,365
2024	4,001			—
2025	3,563			—
Thereafter	21,041			—
Total minimum lease payments	42,703			42,790
Less amount representing interest	(8,795		)	(3,033		)
Total lease liabilities	$	33,908		$	39,757

Leases

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



	Three Months Ended September 30,
	2020		2019
Operating Leases:
Fixed rent expense	$	1,688	$	1,281
Variable rent expense	203		207
Finance Lease:
Amortization of equipment	559		1,093
Interest	615		740
Short-term leases
Short-term lease expenses	58		75
Total lease expenses	$	3,123	$	3,396

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



	September 30, 2020			June 30, 2020
Operating Leases:
ROU assets associated with operating leases	$	32,407		$	32,948
Finance Lease:
Property, plant and equipment, gross	$	108,387		$	104,374
Accumulated depreciation	(90,251		)	(86,540		)
Property, plant and equipment, net	$	18,136		$	17,834

Weighted average remaining lease term (in years)
Operating leases	9.46			9.57
Finance lease	2.47			2.72

Weighted average discount rate
Operating leases	4.83		%	4.45		%
Finance lease	5.46		%	5.46		%

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



	Three Months Ended September 30,
	2020		2019
Cash paid from amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,642	$	1,160
Operating cash flows from finance lease	$	615	$	740
Financing cash flows from finance lease	$	3,989	$	1,691

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



	Operating Leases			Finance Leases
The remainder of 2021	$	4,216		$	13,366
2022	5,401			17,059
2023	4,481			12,365
2024	4,001			—
2025	3,563			—
Thereafter	21,041			—
Total minimum lease payments	42,703			42,790
Less amount representing interest	(8,795		)	(3,033		)
Total lease liabilities	$	33,908		$	39,757