Leases

3 Months Ended

Sep. 30, 2021

Leases [Abstract]

Leases

Leases

The Company’s lease liabilities are recognized based on the present value of the remaining fixed lease payments, over the lease term, using a discount rate of similarly secured borrowings available to the Company. For the purpose of lease liability measurement, the Company considers only payments that are fixed and determinable at the time of commencement. Any variable payments that depend on an index or rate are expensed as incurred. The Company accounts for non-lease components, such as common area maintenance, as a component of the lease, and includes it in the initial measurement of leased assets and corresponding liabilities. The Company’s lease terms and conditions may include options to extend or terminate. An option is recognized when it is reasonably certain that II-VI will exercise that option.

The Company’s lease assets also include any lease payments made and exclude any lease incentives received prior to commencement. Leased assets are tested for impairment in the same manner as long-lived assets used in operations.

The following table presents lease costs, which include short-term leases, lease term, and discount rates ($000):

	Three Months Ended September 30, 2021		Three Months Ended September 30, 2020
Finance Lease Cost
Amortization of right-of-use assets	$	417	$	417
Interest on lease liabilities	307		323
Total finance lease cost	$	724	$	740
Operating lease cost	9,134		9,197
Sublease income	368		368
Total lease cost	$	9,490	$	9,569
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating cash flows from finance leases	$	307	$	323
Operating cash flows from operating leases	8,726		8,631
Financing cash flows from finance leases	306		274
Weighted-Average Remaining Lease Term (in Years)
Finance leases	10.3		11.3
Operating leases	7.0		7.0
Weighted-Average Discount Rate
Finance leases	5.6 %		5.6 %
Operating leases	5.9 %		7.1		%

Leases

Leases

The Company’s lease liabilities are recognized based on the present value of the remaining fixed lease payments, over the lease term, using a discount rate of similarly secured borrowings available to the Company. For the purpose of lease liability measurement, the Company considers only payments that are fixed and determinable at the time of commencement. Any variable payments that depend on an index or rate are expensed as incurred. The Company accounts for non-lease components, such as common area maintenance, as a component of the lease, and includes it in the initial measurement of leased assets and corresponding liabilities. The Company’s lease terms and conditions may include options to extend or terminate. An option is recognized when it is reasonably certain that II-VI will exercise that option.

The Company’s lease assets also include any lease payments made and exclude any lease incentives received prior to commencement. Leased assets are tested for impairment in the same manner as long-lived assets used in operations.

The following table presents lease costs, which include short-term leases, lease term, and discount rates ($000):

	Three Months Ended September 30, 2021		Three Months Ended September 30, 2020
Finance Lease Cost
Amortization of right-of-use assets	$	417	$	417
Interest on lease liabilities	307		323
Total finance lease cost	$	724	$	740
Operating lease cost	9,134		9,197
Sublease income	368		368
Total lease cost	$	9,490	$	9,569
Cash Paid for Amounts Included in the Measurement of Lease Liabilities
Operating cash flows from finance leases	$	307	$	323
Operating cash flows from operating leases	8,726		8,631
Financing cash flows from finance leases	306		274
Weighted-Average Remaining Lease Term (in Years)
Finance leases	10.3		11.3
Operating leases	7.0		7.0
Weighted-Average Discount Rate
Finance leases	5.6 %		5.6 %
Operating leases	5.9 %		7.1		%