Leases

9 Months Ended

Mar. 31, 2022

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 fiscal year 2030. 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				Nine Months Ended
	March 31				March 31
(Amounts in Millions)	2022		2021		2022		2021
Operating lease expense	$	1.2	$	1.3	$	3.6	$	3.1

Variable lease expense	1.1		1.2		2.8		2.5
Total lease expense	$	2.3	$	2.5	$	6.4	$	5.6

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 nine months 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:


	Nine Months Ended
	March 31
(Amounts in Millions)	2022			2021
Cash flow information:
Operating lease payments impacting lease liability	$	5.8		$	4.2
Non-cash impact of obtaining new right-of-use assets	$	6.3		$	5.1

	As of
	March 31
	2022			2021
Other information:
Weighted-average remaining term (in years)	4.8			4.4
Weighted-average discount rate	4.4		%	4.5		%

The following table summarizes the future minimum lease payments as of March 31, 2022:


	Fiscal Year Ended
(Amounts in Millions)	June 30 (1)
2022	$	1.5
2023	6.0
2024	4.5
2025	3.8
2026	2.8
Thereafter	3.9
Total lease payments	$	22.5
Less interest	2.2
Present value of lease liabilities	$	20.3

(1) Lease payments include options to extend lease terms that are reasonably certain of being exercised.

In fiscal year 2021, we executed a contract to sell a warehouse which was accounted for as a failed sale leaseback as control did not pass to the buyer. During the third quarter of fiscal year 2022 we received payment and control passed to the buyer, and we recorded a pre-tax gain on sale of the warehouse of $4.5 million. The gain was recorded in the Other General (Income) Expense line item in the Condensed Consolidated Statements of Income.