Lease Obligations

6 Months Ended

Aug. 31, 2022

(18)

Lease Obligations

We account for leases in accordance with ASC 842 “Leases” (“ASC 842”). We determine whether an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration.

We have operating leases for office equipment, as well as offices, warehouses, and other facilities used for our operations. We also have finance leases comprised primarily of computer hardware and machinery and equipment. Our leases have remaining lease terms of less than 1 year to 9 years, some of which include renewal options. We consider these renewal options in determining the lease term used to establish our right-of-use assets and lease liabilities when it is determined that it is reasonably certain that the renewal option will be exercised. The Company had no short-term leases during the three and six months ended August 31, 2022.

Refer to Note 7 for supplemental cash flow information related to leases.

The components of lease cost for the three and six months ended August 31, 2022 and 2021 were as follows:


	Three months ended August 31,				Six months ended August 31,
	2022		2021		2022		2021
Operating lease cost (a) (c)	$	390	$	342	$	785	$	683
Finance lease cost:
Amortization of right of use assets (a)		73		101		146		222
Interest on lease liabilities (b)		1		3		2		7
Total finance lease cost	$	74	$	104	$	148	$	229

(a)

Recorded within Selling, General and administrative, Engineering and technical support, and Cost of sales on the Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income.

(b)

Recorded within Interest and bank charges on the Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income.

(c)

Includes immaterial amounts related to variable rent expense.

Supplemental balance sheet information related to leases is as follows:


	August 31, 2022			February 28, 2022
Operating Leases
Operating lease, right of use assets	$	4,106		$	4,464
Total operating lease right of use assets	$	4,106		$	4,464
Accrued expenses and other current liabilities	$	1,201		$	1,255
Operating lease liabilities, less current portion		2,924			3,298
Total operating lease liabilities	$	4,125		$	4,553
Finance Leases
Property, plant, and equipment, gross	$	2,503		$	2,503
Accumulated depreciation		(2,354	)		(2,208	)
Total finance lease right of use assets	$	149		$	295
Accrued expenses and other current liabilities	$	155		$	224
Finance lease liabilities, less current portion		—			78
Total finance lease liabilities	$	155		$	302
Weighted Average Remaining Lease Term
Operating leases	5.2 years			5.5 years
Finance leases	1.0 years			1.3 years
Weighted Average Discount Rate
Operating leases		3.79	%		4.01	%
Finance leases		3.87	%		3.87	%

Maturities of lease liabilities on August 31 of each of the succeeding years are as follows:


	Operating Leases		Finance Leases
2023	$	1,313		157
2024		961		—
2025		574		—
2026		433		—
2027		292		—
Thereafter		928		—
Total lease payments		4,501		157
Less imputed interest		376		2
Total	$	4,125		155

As of August 31, 2022, the Company has not entered into any lease agreements that have not yet commenced.

The Company owns and occupies buildings as part of its operations. Certain space within these buildings may, from time to time, be leased to third parties from which the Company earns rental income as lessor. This leased space is recorded within property, plant, and equipment and was not material to the Company's Consolidated Balance Sheets at August 31, 2022 and February 28, 2022. Rental income earned by the Company for the three and six months ended August 31, 2022 and 2021 was $230 and $451, respectively, compared to $197 and $361, respectively, and is recorded within Other (expense) income.