Operating Leases

The Company leases certain office space and equipment under operating leases for use in our operations. We recognize operating lease expense on a straight-line basis over the lease term. Certain of our lease agreements include one or more options to renew. The exercise of lease renewal options is generally at our discretion. Variable lease expense primarily relates to maintenance and other monthly expense that do not depend on an index or rate.

We determine if an arrangement is a lease at contract inception. Lease and non-lease components are accounted for as a single component for all leases. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the expected lease term, which includes optional renewal periods if we determine it is reasonably certain that the option will be exercised. As our leases do not provide an implicit rate, the discount rate used in the present value calculation represents our incremental borrowing rate determined using information available at the commencement date.

Operating lease expense is included as a component of general and administrative expenses in our condensed consolidated statements of operations. For the three and six months ended March 31, 2020, we recorded operating lease expense of $1.1 million and $2.3 million, respectively. Cash payments on lease liabilities during the three and six months ended March 31, 2020 totaled $1.3 million and $2.4 million, respectively. Sublease income and variable lease expenses are de minimis. The Company increased both its operating lease ROU asset and operating lease liability by $3.1 million as a result of an additional lease that commenced during the three and six months ended March 31, 2020.

At March 31, 2020, weighted-average remaining lease term and discount rate were as follows:



Weighted-average remaining lease term	5.3 years
Weighted-average discount rate	4.88%

The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of March 31, 2020:



Fiscal Years Ending September 30,
in thousands
2020 ^(a)	$	2,275
2021	4,573
2022	3,743
2023	2,933
2024	1,818
Thereafter	4,270
Total lease payments	19,612
Less: imputed interest	2,465
Total operating lease liabilities	$	17,147

^(a)Remaining lease payments are for the period beginning April 1, 2020 through September 30, 2020.

At September 30, 2019, under ASC 840, Leases (“ASC 840”), the future minimum rental commitments totaled $20.1 million under non-cancelable operating leases as follows: 2020 - $4.7 million; 2021 - $4.5 million; 2022 - $3.6 million; 2023 - $2.9 million; 2024 - $1.8 million; and $2.6 million thereafter.