Leases

9 Months Ended

Jun. 30, 2020

Leases

Leases

Note 16.  Leases

Nature of the Leases

The Company has operating and financing leases for buildings, equipment (e.g. trucks and forklifts), vehicles, and computer equipment. Leasing arrangements require fixed payments and also include an amount that is probable will be owed under residual value guarantees, if applicable. Some lease payments also include payments related to purchase or termination options when the lessee is reasonably certain to exercise the option or is not reasonably certain not to exercise the option, respectively. The leases have remaining terms of one to 17 years.

For all leases with an initial expected term of more than 12 months, the Company recorded, at the adoption date of ASC 842 or lease commencement date for leases entered into after the adoption date, a lease liability, which is the lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or to control the use of, a specified asset for the lease term. The Company utilizes its collateralized incremental borrowing rate commensurate to the lease term as the discount rate for its leases, unless the Company can specifically determine the lessor’s implicit rate.

Significant Judgments and Assumptions

Determination of Whether a Contract Contains a Lease

The Company determines whether a contract is or contains a lease at the inception of the contract. The contract is or contains a lease if the contract conveys the right to control the use of identified assets for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from use of the property, plant, and equipment and have the right to direct its use.

Practical Expedients (Policy Elections)

The Company elected certain practical expedients and transition relief, including the short-term lease recognition exemption, which excludes leases with a term of 12 months or less from recognition on the balance sheet, recognizing lease components and non-

lease components together as a single lease component, and the transition relief package which, among other things, includes not reassessing the lease classification or whether a contract is or contains a lease. 

The following table sets forth the components of the Company’s lease cost for the three and nine months ended June 30, 2020.

		Three Months Ended June 30,	Nine Months Ended June 30,
	2020		2020
Finance lease cost:
Amortization of right of use asset	$	108	$	323
Interest on lease liabilities		205		620
Total finance lease cost	$	313	$	943
Operating lease cost	$	381	$	1,111
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases		205		620
Operating cash flows from operating leases		381		1,111
Financing cash flows from finance leases		43		125
Total cash paid for amounts included in measurement of lease liabilities	$	629	$	1,856

Lease costs associated with short term leases are not material.

The following table sets forth the Company’s right of use assets and lease liabilities as of June 30, 2020.

	June 30,
	2020
Finance lease assets (included in Property, plant and equipment, net)	$	6,611
Operating right of use lease assets (included in Other assets)	$	1,984
Finance lease liabilities
Accrued expenses	$	188
Long-term obligations (less current portion)		7,665
Total Finance lease liabilities	$	7,853
Operating lease liabilities	$	1,984

	June 30,
	2020
Weighted average lease term (Years)
Finance leases		15.4
Operating leases		3.2
Weighted average discount rate
Finance leases		10.33	%
Operating leases		5.25	%

The following is a table of future minimum lease payments during each fiscal year under operating and finance leases and the present value of the net minimum lease payments as of June 30, 2020.

	Finance		Operating
Future minimum lease payments	Leases		Leases
2020	$	249	$	290
2021		1,001		808
2022		1,012		426
2023		1,024		293
2024		1,031		280
Thereafter		11,540		71
Total minimum lease payments		15,857		2,168
Less: amount representing interest		(8,004)		(184)
Present value of net minimum lease payments	$	7,853	$	1,984

The following is a table of future minimum lease payments as of September 30, 2019.

	Finance		Operating
Contractual Obligations as of September 30, 2019	Leases		Leases
2020	$	993	$	2,542
2021		1,000		1,254
2022		1,013		460
2023		1,024		277
2024		1,032		259
Thereafter		11,623		60
Total minimum lease payments		16,685		4,852
Less: amount representing interest		(8,706)		—
Present value of net minimum lease payments	$	7,979	$	4,852