Note 10. Leases
As of August 31, 2024, the Company had operating leases for real estate, vehicles, manufacturing equipment, IT equipment and office equipment. The Company did not have significant finance leases during the year ended August 31, 2024. Our leases typically range in term from 3 to 15 years and may contain renewal options for periods up to 5 years at our discretion. Our leases generally contain payments that are primarily fixed; however, certain lease arrangements contain variable payments, which are expensed as incurred and not included in the measurement of ROU assets and lease liabilities. These amounts include payments affected by changes in the Consumer Price Index and executory costs (such as real estate taxes, utilities and common-area maintenance), which are based on usage or performance. In addition, our leases generally do not include material residual value guarantees or material restrictive covenants.
The components of lease costs for the year ended August 31, 2024, 2023 and 2022 were as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| Year Ended August 31, |
| 2024 | | 2023 | | 2022 |
| Operating lease cost | $ | 12,610 | | | $ | 13,155 | | | $ | 14,316 | |
| Short-term lease cost | 2,042 | | | 2,318 | | | 1,714 | |
| Variable lease cost | 2,850 | | | 4,411 | | | 3,609 | |
Supplemental cash flow and other information related to leases for the year ended August 31, 2024, 2023 and 2022 were as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| Year Ended August 31, |
| 2024 | | 2023 | | 2022 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | |
| Operating cash flows from operating leases | $ | 12,119 | | | $ | 13,153 | | | $ | 14,166 | |
| | | | | |
| Right-of-use assets obtained in exchange for new lease liabilities: | | | | | |
| Operating leases | 3,075 | | | 1,654 | | | 4,584 | |
Supplemental balance sheet information related to leases at August 31, 2024 and 2023 were as follows (in thousands):
| | | | | | | | | | | |
| August 31, |
| 2024 | | 2023 |
| Operating leases: | | | |
| Other long-term assets | $ | 32,961 | | | $ | 37,714 | |
| | | |
| Other current liabilities | 9,464 | | | 9,786 | |
| Other long-term liabilities | 25,154 | | | 29,245 | |
| Total operating lease liabilities | $ | 34,618 | | | $ | 39,031 | |
| | | |
| Weighted Average Remaining Lease Term: | | | |
| Operating leases | 7.0 years | | 6.5 years |
| | | |
| Weighted Average Discount Rate: | | | |
| Operating leases | 5.5 | % | | 5.0 | % |
A summary of the future minimum lease payments due under operating leases with terms of more than one year at August 31, 2024 is as follows (in thousands):
| | | | | | | | |
| 2025 | | $ | 10,317 | |
| 2026 | | 7,912 | |
| 2027 | | 4,983 | |
| 2028 | | 4,197 | |
| 2029 | | 3,053 | |
| Thereafter | | 13,369 | |
| Total minimum lease payments | | 43,831 | |
| Less imputed interest | | (9,213) | |
| Present value of net minimum lease payments | | $ | 34,618 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.