Leases

9 Months Ended

Mar. 31, 2020

The Company has operating leases for certain manufacturing sites, office space, warehouses, land, vehicles and equipment. Most leases include the option to renew, with renewal terms that can extend the lease term from one to five years or more. Right-of-use lease assets and lease liabilities are recognized at the commencement date based on the present value of the remaining lease payments over the lease term, which includes renewal periods the Company is reasonably certain to exercise. Short term leases with a term of twelve months or less, including reasonably certain holding periods, are not recorded on the balance sheet. The Company's leases do not contain any material residual value guarantees or material restrictive covenants. At March 31, 2020, the Company does not have material lease commitments that have not commenced.

The components of lease expense were as follows:


(in millions)	Three Months Ended March 31,		Nine Months Ended March 31,
Statement of Income Location	2020
Operating leases
Cost of products sold	$	22.4	$	67.9
Selling, general and administrative expenses	5.6		17.0

Finance leases
Amortization of right-of-use assets	0.6		1.2
Interest on lease liabilities	0.2		0.5
Total lease cost (1)	$	28.8	$	86.6

(1)Includes short-term leases and variable lease costs, which are immaterial.

Supplemental balance sheet information related to leases was as follows:

(in millions)

Balance Sheet Location

March 31, 2020

Assets

Operating lease assets

525.8

Finance lease assets (1)

Property, plant and equipment, net

32.0

Total lease assets

557.8

Liabilities

Operating leases:

Current operating lease liabilities

Other current liabilities

83.6

Non-current operating lease liabilities

Operating lease liabilities

465.6

Finance leases:

Current finance lease liabilities

Current portion of long-term debt

1.8

Non-current finance lease liabilities

Long-term debt, less current portion

32.1

Total lease liabilities

583.1

(1)Finance lease assets are recorded net of accumulated amortization of $8.7 million at March 31, 2020.

As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate as of the commencement date to determine the present value of lease payments.

Supplemental cash flow information related to leases was as follows:


	Nine Months Ended March 31,
(in millions)	2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	80.5
Operating cash flows from finance leases	$	0.4
Financing cash flows from finance leases	$	0.7

Lease assets obtained in exchange for new lease obligations:
Operating leases	$	52.3
Finance leases	$	31.3

Maturities of lease liabilities were as follows:


(in millions)	Operating Leases		Finance Leases
Remainder of fiscal 2020	$	26.9	$	0.9
Fiscal 2021	95.5		2.9
Fiscal 2022	84.9		2.8
Fiscal 2023	73.3		2.6
Fiscal 2024	63.1		2.6
Thereafter	319.6		34.9
Total lease payments	663.3		46.7
Less: imputed interest	114.1		12.8
Present value of lease liabilities	$	549.2	$	33.9

The Company’s future minimum lease commitments as of June 30, 2019, under Accounting Standard Codification Topic 840, the predecessor to Topic 842, are as follows:


(in millions)	Operating Leases
Fiscal 2020	$	97.6
Fiscal 2021	90.4
Fiscal 2022	77.7
Fiscal 2023	67.3
Fiscal 2024	55.9
Thereafter	301.8
Total minimum obligations	$	690.7

The weighted average remaining lease term and discount rate are as follows:


	March 31, 2020
Weighted average remaining lease term (in years):
Operating leases	9.8
Finance leases	18.2

Weighted average discount rate:
Operating Leases	3.9	%
Finance leases	4.0	%