COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2014

Notes to Financial Statements

COMMITMENTS AND CONTINGENCIES (IN THOUSANDS, EXCEPT EARNINGS PER SHARE AND NUMBER OF SHARES)

The Company leases certain of its facilities and equipment under long-term agreements expiring at various dates through fiscal year 2015 and thereafter. Certain of these leases require the Company to pay real estate taxes and insurance and provide for escalation of lease costs based on certain indices.

Future minimum payments under capital leases and non-cancelable operating leases and net rental income under non-cancelable sub-leased properties as of June 30, 2014 were as follows:

	Capital			Operating		Sub-lease Rental			Net Operating
For the Year Ending June 30,	Leases			Leases		(Income)			Leases
2015	$	81		$	710	$	(111	)	$	599
2016		85			795		(130	)		665
2017		83			600		(42	)		558
Thereafter		32			3,001		(18	)		2,983
Total future minimum lease payments	$	281		$	5,106	$	(301	)	$	4,805
Less amount representing interest		-
Present value of net minimum lease payments		281
Less current portion of capital lease obligations		(81	)
Long-term obligations under capital leases		200

Future minimum payments under capital leases and non-cancelable operating leases and net rental income under non-cancelable sub-leased properties as of June 30, 2013 were as follows:

	Capital			Operating		Sub-lease Rental			Net Operating
For the Year Ending June 30,	Leases			Leases		(Income)			Leases
2014	$	105		$	723	$	(32	)	$	691
2015		68			639		-			639
2016		72			666		-			666
Thereafter		88			1,057		-			1,057
Total future minimum lease payments	$	333		$	3,085	$	(32	)	$	3,053
Less amount representing interest		-
Present value of net minimum lease payments		333
Less current portion of capital lease obligations		(105	)
Long-term obligations under capital leases		228

The Company purchased equipment under the capital lease agreements with rates ranging from 1.88% to 4.30%. These agreements mature ranging from July 2013 to June 2018.

The sublease agreement of the Penang property expired in November 2012 and was not renewed due to the fact that the operation in Malaysia planned to sell the factory building. The sublease agreement of the Petaling Jaya Plant II property will expire in November 2013. However, the lease of the Petaling Jaya Plant II property was terminated on July 31, 2013 without any penalties or cost to the Company. Total net income from rental generated from subleases amounted to $1 in fiscal year 2014 and $9 in fiscal year 2013, since the rental for fiscal year 2014 was only for a single month, as the rental agreement was terminated in July 2013.

Total rental expense on all operating leases, cancelable and non-cancelable, amounted to $687 in fiscal year 2014 and $941 in fiscal year 2013.

Trio-Tech (Malaysia) Sdn. Bhd. has capital lease for the purchase of equipment and other related infrastructure costs amounting to Malaysia Ringgit 601, or approximately $184 based on the exchange rate on June 30, 2014 published by the Monetary Authority of Singapore.

Trio-Tech (Tianjin) Co. Ltd has capital commitments for the purchase of equipment and other related infrastructure costs amounting to RMB 2,199, or approximately $353 based on the exchange rate as of June 30, 2014 published by the Monetary Authority of Singapore.

Deposits with banks in China are not insured by the local government or agency, and are consequently exposed to risk of loss. The Company believes the probability of a bank failure, causing loss to the Company, is remote.

The Company is, from time to time, the subject of litigation claims and assessments arising out of matters occurring in its normal business operations.  In the opinion of management, resolution of these matters will not have a material adverse effect on the Company’s financial statements.