NOTE 6 – LEASES

Lease Expense

In the normal course of business, we rent office space, primarily for international sales administration offices, in commercial office complexes that are conducive to sales and administrative operations. We also rent warehousing and distribution facilities that are designed to provide secure storage and efficient distribution of our training products, books, and accessories. All of these leases are classified as operating leases. Operating lease assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. Since most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Leases with an initial term of 12 months or less are not recorded on the balance sheet. For operating leases, expense is recognized on a straight-line basis over the lease term. We do not have significant amounts of variable lease payments.

Some of our operating leases contain renewal options that may be exercised at our discretion after the completion of the base rental term. At November 30, 2019, we had operating leases with remaining terms ranging from less than one year to approximately six years. The amounts of assets and liabilities (in thousands) and other information related to our operating leases follows:



	Balance Sheet		November 30,
	Caption		2019
Assets:
Operating lease right of use assets	Other long-term assets	$	1,481

Liabilities:
Current:
Operating lease liabilities	Accrued liabilities		780
Long-Term:
Operating lease liabilities	Other long-term liabilities		701
		$	1,481

Weighted Average Remaining Lease Term:
Operating leases (years)			3.0

Weighted Average Discount Rate:
Operating leases			4.2	%

During each of the quarters ended November 30, 2019 and November 30, 2018, we recognized $0.4 million of lease expense associated with operating leases, which is reported in selling, general, and administrative expense.

The approximate future minimum lease payments under our operating leases at November 30, 2019, is as follows (in thousands):



YEAR ENDING AUGUST 31,		Amount
Remainder of 2020	$	663
2021		479
2022		134
2023		117
2024		94
Thereafter		98
Total operating lease payments		1,585
Less imputed interest		(104)
Present value of operating lease liabilities	$	1,481

Lease Income

We have subleased the majority of our corporate headquarters campus located in Salt Lake City, Utah to multiple tenants. These sublease agreements are accounted for as operating leases. We recognize sublease income on a straight-line basis over the life of the sublease agreement. The cost basis of our corporate campus was $35.1 million, which had a carrying value of $6.0 million at November 30, 2019. The following future minimum lease payments due to us from our sublease agreements at November 30, 2019, are as follows (in thousands):



YEAR ENDING AUGUST 31,		Amount
Remainder of 2020	$	2,930
2021		2,341
2022		1,514
2023		1,514
2024		1,527
Thereafter		1,275
	$	11,101

Sublease revenue totaled $1.0 million during each of the quarters ended November 30, 2019 and November 30, 2018, and was included in net sales in the accompanying condensed consolidated statements of operations.