LEASES

9 Months Ended

Mar. 31, 2021

We enter into operating leases, both domestically and internationally, for certain facilities, automobiles, data centers and equipment for use in the ordinary course of business. The duration of the majority of these leases generally range from 1 to 10 years, some of which include options to extend for an additional 3 to 5 years after the initial term. Additionally, the land upon which our headquarters in Waterloo, Ontario, Canada is located is leased from the University of Waterloo for a period of 49 years beginning in December 2005, with an option to renew for an additional term of 49 years. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets and we do not have any material finance leases.

We account for a contract as a lease when we have the right to direct the use of the asset for a period of time while obtaining substantially all of the asset’s economic benefits. We determine the initial classification and measurement of our right of use (ROU) assets and lease liabilities at the lease commencement date and thereafter if modified.

ROU assets represent our right to control the underlying assets under lease, and the lease liability is our obligation to make the lease payments related to the underlying assets under lease, over the contractual term. ROU assets and lease liabilities are recognized on the Condensed Consolidated Balance Sheets based on the present value of future minimum lease payments to be made over the lease term. When available, we will use the rate implicit in the lease to discount lease payments to present value. However, real estate leases generally do not provide a readily determinable implicit rate, therefore, we must estimate our incremental borrowing rate to discount the lease payments. We estimate our incremental borrowing rate based on a collateralized basis with similar terms and payments, in an economic environment where the leased asset is located.

The ROU asset equals the lease liability, adjusted for any initial direct costs, prepaid rent and lease incentives on initial recognition. Fixed lease costs are included in the recognition of ROU assets and lease liabilities. Variable lease costs are not included in the measurement of the lease liability. These variable lease payments are recognized in the Condensed Consolidated Statements of Income in the period in which the obligation for those payments is incurred. Lease expense for minimum lease payments continue to be recognized in the Condensed Consolidated Statements of Income on a straight-line basis over the lease term.

We have not elected the practical expedient to combine lease and non-lease components in the determination of lease costs for our facility leases. For all other asset classes, we have elected the practical expedient to combine the lease and the non-lease components. The lease liability includes lease payments related to options to extend or renew the lease term only if we are reasonably certain we will exercise those options. Our leases typically do not contain any material residual value guarantees or restrictive covenants.

In certain circumstances, we sublease all or a portion of a leased facility to various other companies through a sublease agreement.

Lease Costs and Other Information

The following illustrates the various components of operating lease costs for the period indicated:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2021		2020		2021		2020
Operating lease cost	$	16,065	$	19,157	$	47,327	$	51,259
Short-term lease cost	222		455		724		743
Variable lease cost	852		1,140		2,152		2,647
Sublease income	(1,569)		(1,481)		(4,762)		(4,618)
Total lease cost	$	15,570	$	19,271	$	45,441	$	50,031

The weighted average remaining lease term and discount rate for the periods indicated below were as follows:


	As of March 31, 2021		As of June 30, 2020
Weighted-average remaining lease term	6.45 years		6.18 years
Weighted-average discount rate	2.81	%	3.12	%

Supplemental Cash Flow Information

The following table presents supplemental information relating to cash flows arising from lease transactions. Cash payments made for variable lease cost and short-term lease are not included in the measurement of operating lease liabilities, and, as such, are excluded from the amounts below:


	Nine Months Ended March 31,
	2021		2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	56,645	$	53,996
Right of use assets obtained in exchange for new operating lease liabilities (1) (2)	$	59,762	$	15,964

(1) Excludes the impact of $60.1 million and $2.9 million of ROU assets acquired through the acquisitions of Carbonite, Inc. (Carbonite) and XMedius, respectively, during the nine months ended March 31, 2020.

(2) Excludes the release of $22.3 million of lease liabilities during the nine months ended March 31, 2021 relating to office space that was abandoned during the fourth quarter of Fiscal 2020 that has since been early terminated or assigned to a third party. These recoveries have been recorded in "Special charges (recoveries)" in the Condensed Consolidated Statements of Income. Please see note 18 "Special Charges (Recoveries)".

Maturity of Lease Liabilities

The following table presents the future minimum lease payments under our operating leases liabilities as of March 31, 2021:


Fiscal years ending June 30,
2021 (three months ended)	$	15,796
2022	62,238
2023	52,597
2024	42,075
2025	31,916
Thereafter	94,010
Total Lease payments	$	298,632
Less: Imputed interest	(24,905)
Total	$	273,727
Reported as:
Current operating lease liabilities	$	56,143
Non-current operating lease liabilities	217,584
Total	$	273,727

Operating lease maturity amounts included in the table above do not include sublease income expected to be received under our various sublease agreements with third parties. Under the agreements initiated with third parties, we expect to receive sublease income of $2.0 million over the remainder of Fiscal 2021, and $20.1 million thereafter.