Leases, Codification Topic 842

12 Months Ended

Sep. 30, 2023

Leases Of Lessee Operating Leases And Finance Leases Disclosure

Leases

Presentation of Leases

We lease certain office, warehouse, manufacturing, distribution, and research and development facilities and equipment under operating leases. Our leases have remaining lease terms of up to 10 years. The terms and conditions of our leases may include options to extend or terminate the lease. These factors are considered at lease inception or at the time of the amendment and included in the lease term when these options are reasonably certain of exercise.

We determine if a contract is, or contains, a lease at inception by evaluating whether the contract conveys the right to control the use of an identified asset. For all classes of leased assets, we have elected the practical expedient to account for any non-lease components in the contract together with the related lease component in the same unit of account.

Right-of-Use (“ROU”) assets and lease liabilities are recognized in our consolidated balance sheets at the commencement date based on the present value of lease payments over the lease term. Additionally, ROU assets include any lease payments made at or before the commencement date, as well as any initial direct costs incurred, and are reduced by any lease incentives received. As most of our operating leases do not provide an implicit rate, we apply our incremental borrowing rate to determine the present value of remaining lease payments. Our incremental borrowing rate is determined based on information available at the commencement date of the lease.

For all classes of leased assets, we have applied an accounting policy election to exclude short-term leases from recognition in our consolidated balance sheets. A short-term lease has a term of 12 months or less at the commencement date and does not include a purchase option that is reasonably certain of exercise. We recognize short-term lease cost in our consolidated statements of operations on a straight-line basis over the lease term.

Our short-term lease cost for the years ended September 30, 2023, 2022, and 2021 and short-term lease commitments at September 30, 2023 and 2022 are immaterial.

We have certain lease contracts with terms and conditions that provide for variability in the payment amount based on changes in facts or circumstances occurring after the commencement date. These variable lease payments are recognized in our consolidated statements of operations as the obligation is incurred.

At September 30, 2023, any legally-binding minimum lease payments for operating leases signed but not yet commenced, subleases, leases that impose significant restrictions or covenants, related party leases or sale-leaseback arrangements were immaterial.

The components of lease cost are presented below.


	Year ended September 30,
	2023		2022		2021
	(in millions)
Operating lease cost	$	6.3	$	5.8	$	6.1
Finance lease cost	1.1		1.3		1.2
Total lease cost	$	7.4	$	7.1	$	7.3

Supplemental cash flow information related to leases are presented below, in millions.


	Year ended September 30,
	2023		2022
	(in millions)
Operating cash used for operating leases	$	6.4	$	5.8
Financing cash used for finance leases	$	1.1	$	0.7

Supplemental information regarding our lease assets and liabilities is below.


		September 30,
		2023		2022
		(in millions)
Right-of-use assets:
Operating leases	Other noncurrent assets	$	23.6	$	26.0
Finance leases	Plant, property and equipment	1.2		1.4
Total right-of-use assets		$	24.8	$	27.4
Lease liabilities:
Operating leases - current	Other current liabilities	$	4.9	$	4.4
Operating leases - noncurrent	Other noncurrent liabilities	19.8		22.4
Finance leases - current	Current portion of long-term debt	0.7		0.8
Finance leases - noncurrent	Long-term debt	0.6		0.8
Total lease liabilities		$	26.0	$	28.4

Supplemental information related to lease terms and discount rates are presented below.


	Year ended September 30,
	2023		2022
Weighted-average remaining lease term (years):
Operating leases	5.81		6.67
Finance leases	2.24		2.15
Weighted-average interest rate:
Operating leases	5.51	%	5.48	%
Finance leases	4.69	%	3.64	%

Total lease liabilities at September 30, 2023 have scheduled maturities as follows:


	Operating Leases		Finance Leases
	(in millions)
2024	$	6.2	$	0.7
2025	5.7		0.4
2026	5.2		0.2
2027	4.3		0.1
2028	2.7		—
Thereafter	4.9		—
Total lease payments	29.0		1.4
Less: imputed interest	(4.3)		(0.1)
Present value of lease liabilities	$	24.7	$	1.3