LEASES

9 Months Ended

Mar. 31, 2020

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company determines if an arrangement is a lease at lease inception. For operating leases entered into prior to July 1, 2019, the ROU assets and operating lease liabilities are recognized in the balance sheet based on the present value of the remaining future minimum payments over the lease term from the implementation date of the standard, July 1, 2019. For leases entered into subsequent to July 1, 2019, the operating lease ROU assets and operating lease liabilities are based on the present value of minimum payments over the lease term at the commencement date of the lease.

The Company uses discount rates to determine the present value of future lease payments. The Company uses its secured incremental borrowing rate, based on the information available for leases, including the lease term and interest rate environment in the country in which the lease exists. The lease terms used to calculate the ROU assets and lease liabilities may include options to extend or terminate when it is reasonably certain that the Company will exercise that option.

The Company leases office facilities under non-cancelable operating leases with terms generally ranging between 10.0 and 25.0 years. The Company utilizes these leased office facilities for use by its employees in countries in which the Company conducts its business. Leases are negotiated with third parties and, in some instances contain renewal, expansion and termination options. The Company also subleases certain office facilities to third parties when the Company no longer intends to utilize the space. None of the Company’s leases restricts the payment of dividends or the incurrence of debt or additional lease obligations, or contain significant purchase options. A portion of our real estate lease portfolio contains base rents subject to annual changes in the Consumer Price Index (“CPI”) as well as charges for operating expenses which are reimbursable to the landlord based on actual usage. Changes to the CPI and payments for such reimbursable operating expenses that are not defined with a minimum rate increase are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred.

As a practical expedient, the Company has elected an accounting policy not to separate non-lease components from lease components and instead, account for these components as a single lease component. The Company has made an accounting policy election not to recognize ROU assets and lease liabilities for leases that, at the commencement date, are for 12 months or less. All of the Company’s material leases are operating leases. These are primarily real estate properties, including corporate offices, retail stores and facilities to support the Company's manufacturing, research and development and distribution operations.

The following chart provides additional information about the Company’s operating leases for the three and nine months ended March 31, 2020:


Lease Cost:	Three Months Ended March 31, 2020		Nine Months Ended March 31, 2020
Operating lease cost	$	34.1	$	96.2
Short-term lease cost	0.5		1.8
Variable lease cost	17.5		45.2
Sublease income	(2.1)		(6.7)
Net lease cost	$	50.0	$	136.5
Other information:
Operating cash outflows from operating leases	$	(31.7)	$	(94.8)
Right-of-use assets obtained in exchange for lease obligations	11.4		15.5

Weighted-average remaining lease term - real estate			7.4 years
Weighted-average discount rate - real estate leases			3.38		%

Future minimum lease payments for the Company’s operating leases as of March 31, 2020 are as follows:


Fiscal Year Ending June 30,

2020, remaining	$	41.0
2021	113.3
2022	97.9
2023	71.8
2024	61.2
Thereafter	221.5
Total future lease payments	606.7
Less: imputed interest	(72.8)
Total present value of lease liabilities	533.9
Current operating lease liabilities	104.9
Long-term operating lease liabilities	429.0
Total operating lease liabilities	$	533.9

Table excludes obligations for leases with original terms of 12 months or less which have not been recognized as ROU assets or liabilities in the Condensed Consolidated Balance Sheets.

At June 30, 2019, the aggregate future minimum rental commitments under all non-cancelable operating lease agreements were as follows:


Fiscal Year Ending June 30,
2020	$	122.2
2021	111.2
2022	91.3
2023	76.7
2024	67.8
Thereafter	252.3
Total	721.5
Less: sublease income	(20.1)
Total payments	$	701.4