Leases

12 Months Ended

Jun. 30, 2021

We lease certain machinery and plant equipment, office space, and production and warehouse facilities under non-cancelable operating leases that expire on various dates through 2034. Our finance leases primarily relate to machinery and plant equipment.

The following table presents the classification of right-of-use assets and lease liabilities as of June 30, 2021 and 2020:


Leases	Consolidated Balance Sheet Classification	June 30, 2021		June 30, 2020

Assets:
Operating right-of-use assets	Operating lease assets, net (1)	$	87,626	$	156,258
Finance right-of-use assets	Property, plant, and equipment, net (2)	35,384		20,842
Total lease assets		$	123,010	$	177,100
Liabilities:
Current:
Operating lease liabilities	Operating lease liabilities, current (1)	$	26,551	$	41,772
Finance lease liabilities	Other current liabilities (2)	32,314		8,055
Non-current:
Operating lease liabilities	Operating lease liabilities, non-current	66,222		128,963
Finance lease liabilities	Other liabilities	18,528		18,617
Total lease liabilities		$	143,615	$	197,407

__________________

(1) The decrease in operating lease assets and liabilities is due primarily to the Waltham lease modifications described below.

(2) The increase in finance lease assets and liabilities is due primarily to the lease modification described below within the "Other Lease Modification" section.

The following table represents the lease expenses for the years ended June 30, 2021 and 2020:


	Year Ended
	June 30, 2021		June 30, 2020
Operating lease expense (1)	$	36,803	$	43,058
Finance lease expense:
Amortization of finance lease assets	5,557		5,766
Interest on lease liabilities	211		698
Variable lease expense	7,846		10,775
Less: sublease income	(2,309)		(3,545)
Net operating and finance lease cost	$	48,108	$	56,752

__________________

(1) The decrease in operating lease expense for the fiscal year ended June 30, 2021 is driven primarily by the Waltham lease modification described below.

Future minimum lease payments under non-cancelable leases as of June 30, 2021 were as follows:


Payments Due by Period	Operating lease obligations		Finance lease obligations		Total lease obligations
Less than 1 year	$	29,527	$	32,873	$	62,400
2 years	25,125		6,738		31,863
3 years	20,377		5,511		25,888
4 years	12,397		4,326		16,723
5 years	7,270		2,181		9,451
Thereafter	6,899		1,293		8,192
Total	101,595		52,922		154,517
Less: present value discount	(8,822)		(2,080)		(10,902)
Lease liability	$	92,773	$	50,842	$	143,615

Other information about leases is as follows:


Lease Term and Discount Rate	June 30, 2021		June 30, 2020
Weighted-average remaining lease term (years):
Operating leases	4.28		6.18
Finance leases (1)	10.71		4.61
Weighted-average discount rate:
Operating leases	3.17	%	2.83	%
Finance leases	3.93	%	2.62	%

__________________

(1) The increase to finance leases' weighted-average lease term is largely due to the reclassification of an operating lease to a finance lease upon giving notice to a landlord to exercise our purchase option under an existing lease. Refer to the "Other Lease Modification" section below for more details.

Our leases have remaining lease terms of 1 year to 14 years, inclusive of renewal or termination options that we are reasonably certain to exercise.


	Year Ended
Supplemental Cash Flow Information	June 30, 2021		June 30, 2020
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	47,327	$	40,777
Operating cash flows from finance leases	211		698
Financing cash flows from finance leases	8,001		9,511

__________________

(1) The operating lease cash flows included $8,761 of termination fees for the Waltham lease modification as described below.

Waltham Lease Modification

On January 6, 2021, we entered into an arrangement that modifies the lease agreement for our Waltham, Massachusetts office location, which results in us retaining a small portion of the previously leased office space in exchange for a reduction to our monthly rent payments for the space we no longer lease. As part of the agreement, we were required to pay a termination fee of $8,761 in two equal installments. The first payment was made on January 6, 2021, and the remaining amount was paid on April 1, 2021. The termination fee is inclusive of the rent that would have otherwise been paid on the leased space through June 2021 while it remained vacant. We separately entered into a lease agreement for a new office location in Waltham, Massachusetts which commenced on June 1, 2021. Prior to the amendment, the total remaining lease commitments through September 2026 were $64,811. Under the modified lease term, combined with the new lease arrangement, the total lease commitments through September 2026 will be $20,183, excluding the termination penalties included above.

Due to the partial termination of the lease, we recorded a decrease to the operating lease liabilities of $47,801 to reflect the reduced lease payments, including the termination penalties. We also recorded a decrease to the operating lease asset of $46,645 based on the proportionate decrease in the right-of-use asset, which resulted in a gain of $1,156, recognized in general and administrative expense on the consolidated statement of operations for the year ended June 30, 2021.

Due to our plans to no longer occupy the remaining leased office space and instead market the space to be subleased, we identified a triggering event with regards to the modified right-of-use asset. Therefore, we performed a discounted cash flow analysis that considered market-based rent assumptions, which resulted in an impairment of the right-of-use asset of $7,489 which was recognized in general and administrative expense on the consolidated statement of operations for the year ended June 30, 2021. Additionally, we recorded an impairment to general and administrative expense for abandoned assets related to the vacated space totaling $4,483, which included $2,787 in subtenant allowances, $1,312 in leasehold improvements, and $384 in furniture and fixtures.

Other Lease Modification

During the quarter ended March 31, 2021, we identified a triggering event due to a change in our intended use of the right-of-use asset of another one of our leased facilities, as we have committed to plans to exit the space and instead market it to be subleased or sold. We assessed the lease for impairment and performed a discounted cash flow analysis using current market-based rent assumptions, which resulted in an impairment of $7,420 that was recognized in general and administrative expense on the consolidated statement of operations for the year ended June 30, 2021. This impairment resulted in a decrease to the right of use asset totaling $5,280 and to the related leasehold improvements included within property, plant and equipment totaling $2,140. Additionally, we recorded an impairment for abandoned equipment in the amount of $1,680 that was recognized in general and administrative expense for the year ended June 30, 2021.

On June 1, 2021, we gave notice to the landlord of one of our leased facilities to exercise our purchase option under the existing lease, which triggered a remeasurement event as the purchase option is now considered reasonably certain of occurring. We also executed a letter of intent during the current quarter to sell the building to an unrelated third-party, which would occur simultaneously with our exercise of the purchase option. The lease was previously recognized as an operating lease and our intent to now purchase the leased facility resulted in a modification of the lease and reclassification to a finance lease. The modification increased our lease liability to include the estimated purchase option amount, which remains subject to change as the purchase option amount is based on fair market value with an embedded floor. This modification resulted in an increase to the lease liability and asset of $8,201 and recognition of a finance lease asset of $15,860 and a corresponding liability of $23,959.