Leases

3 Months Ended

Sep. 30, 2021

We have operating leases for showrooms, manufacturing facilities, warehouses, certain offices, and other facilities to support our operations in addition to select equipment that expire at various dates through 2027. We have no financing leases. Certain operating lease agreements include rental payments adjusted periodically for inflationary indices. Additionally, some leases include options to renew or terminate the leases which can be exercised at our discretion. Lease terms include the noncancellable portion of the underlying leases along with any reasonably certain lease periods associated with available renewal periods.

Certain leases have terms that are dependent upon the occurrence of events, activities, or circumstances in lease agreements and incur variable lease expense driven by warehouse square footage utilized, property taxes assessed, and other non-lease component charges. Variable lease expense is presented as operating expense in our Condensed Consolidated Statements of Income and Comprehensive Income in the same line item as expense arising from fixed lease payments for operating leases. For all classes of assets, we do not separate non-lease components of a contract from the lease components to which they relate. We do not recognize a right-of-use asset or lease liability for short-term leases that have a lease term of twelve months or less.

The components of our lease expenses are as follows:


	Three Months Ended
	September 30
(Amounts in Millions)	2021		2020
Operating lease expense	$	1.2	$	0.8

Variable lease expense	1.4		0.7
Total lease expense	$	2.6	$	1.5

Right-of-use assets for operating leases are tested for impairment in the same manner as long-lived assets used in operations as explained in Note 13 - Fair Value of Notes to Condensed Consolidated Financial Statements. During the first quarters of fiscal years 2022 and 2021, we recorded $0.7 million and $0.2 million of right-of-use asset and associated leasehold improvement impairments, respectively. The impairment charges are included in the Restructuring Expense line item on our Condensed Consolidated Statements of Income. See Note 4 - Restructuring of Notes to Condensed Consolidated Financial Statements for more information on the impairments.

Supplemental cash flow and other information related to leases are as follows:


	Three Months Ended
	September 30
(Amounts in Millions)	2021			2020
Cash flow information:
Operating lease payments impacting lease liability	$	1.7		$	1.2


	As of
	September 30
	2021			2020
Other information:
Weighted-average remaining term (in years)	4.1			5.4
Weighted-average discount rate	4.6		%	4.7		%

The following table summarizes the future minimum lease payments as of September 30, 2021:


	Fiscal Year Ended
(Amounts in Millions)	June 30 (1)
2022	$	4.9
2023	5.6
2024	3.4
2025	2.7
2026	1.7
Thereafter	0.9
Total lease payments	$	19.2
Less interest	1.6
Present value of lease liabilities	$	17.6

(1) Lease payments include options to extend lease terms that are reasonably certain of being exercised. The payments exclude legally binding minimum lease payments for leases signed but not yet commenced. At September 30, 2021, we had two additional operating leases that have not yet commenced. The first lease, related to a new showroom location, is expected to commence in our second quarter of fiscal year 2022 with a lease term of approximately five and a half years and we will record both a right-of-use asset and lease liability of $0.8 million. The second lease, related to expanded showroom and office space, is expected to commence in our third quarter of fiscal year 2022 with a lease term of approximately eight years and we will record both a right-of-use asset and lease liability of $4.7 million.

In fiscal year 2021 we executed a contract to sell a warehouse with control passing to the buyer at a future date and the transaction was accounted for as a failed sale leaseback. A gain of approximately $4.3 million is anticipated upon settlement of the transaction during our third quarter of fiscal year 2022.