Leases

12 Months Ended

Jun. 30, 2022

Leases

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 2037. 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, 2022 and 2021:


Leases	Consolidated Balance Sheet Classification	June 30, 2022		June 30, 2021

Assets:
Operating right-of-use assets	Operating lease assets, net	$	80,694	$	87,626
Finance right-of-use assets	Property, plant, and equipment, net (1)	19,181		35,384
Total lease assets		$	99,875	$	123,010
Liabilities:
Current:
Operating lease liabilities	Operating lease liabilities, current	$	27,706	$	26,551
Finance lease liabilities	Other current liabilities (1)	6,684		32,314
Non-current:
Operating lease liabilities	Operating lease liabilities, non-current	57,474		66,222
Finance lease liabilities	Other liabilities	14,699		18,528
Total lease liabilities		$	106,563	$	143,615

__________________

(1) The decrease in finance lease assets and current liabilities is due primarily to the lease modification described below within the "Purchase and Sale of Leased Facilities" section.

The following table represents the lease expenses for the years ended June 30, 2022 and 2021:


	Year Ended
	June 30, 2022		June 30, 2021
Operating lease expense (1)	$	26,975	$	36,803
Finance lease expense:
Amortization of finance lease assets	5,892		5,557
Interest on lease liabilities	305		211
Variable lease expense	7,550		7,846
Less: sublease income	(86)		(2,309)
Net operating and finance lease cost	$	40,636	$	48,108

__________________

(1) The decrease in operating lease expense from fiscal year 2021 to fiscal year 2022 is mainly driven by prior year decisions to exit certain leased facilities as some of our businesses have shifted to a remote-first operating model.

Future minimum lease payments under non-cancelable leases as of June 30, 2022 were as follows:


Payments Due by Period	Operating lease obligations		Finance lease obligations		Total lease obligations
Less than 1 year	$	29,361	$	6,148	$	35,509
2 years	23,698		5,343		29,041
3 years	16,308		4,853		21,161
4 years	8,951		3,424		12,375
5 years	4,703		2,213		6,916
Thereafter	9,301		832		10,133
Total	92,322		22,813		115,135
Less: present value discount	(7,142)		(1,430)		(8,572)
Lease liability	$	85,180	$	21,383	$	106,563

Other information about leases is as follows:


Lease Term and Discount Rate	June 30, 2022		June 30, 2021
Weighted-average remaining lease term (years):
Operating leases	4.32		4.28
Finance leases (1)	3.89		10.71
Weighted-average discount rate:
Operating leases	3.71	%	3.17	%
Finance leases (1)	2.79	%	3.93	%

(1) The decrease in finance lease weighted-average remaining lease term and discount rate is due primarily to the lease modification described below within the "Purchase and Sale of Leased Facilities" section.

Our leases have remaining lease terms of 1 year to 15 years, inclusive of renewal or termination options that we are reasonably certain to exercise.


	Year Ended
Supplemental Cash Flow Information	June 30, 2022		June 30, 2021
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	26,641	$	47,327
Operating cash flows from finance leases	305		211
Financing cash flows from finance leases (1)	37,512		8,001

________________

(1) The current fiscal year financing cash outflows include the payment to purchase the leased facility discussed below.

Purchase and Sale of a Leased Facility

During the second quarter of fiscal year 2022, we paid $27,885 to exercise the purchase option available for one of our leased facilities, resulting in a $23,534 decrease in the current portion of our finance lease obligations. We immediately sold this facility to a separate third party for $23,226.

We previously identified a triggering event for this leased facility in fiscal year 2021 due to a change in our intended use of the right-of-use asset, as we had committed to plans to exit the space and instead market it to be subleased or sold. At that time, 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. 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.

Due to the fiscal year 2021 impairment charge taken, we recognized a $3,324 gain on the sale of the asset within general and administrative expense on our consolidated statement of operations during the year ended June 30, 2022. For the year ended June 30, 2022, our consolidated statement of cash flows includes a $23,226 cash inflow for the sale of the facility presented as an investing activity as part of proceeds from the sale of assets and a $27,885 cash outflow for the exercise of the purchase option presented as a financing activity as part of payments of finance lease obligations.

Waltham Lease Modification

On January 6, 2021, we modified the lease agreement for our Waltham, Massachusetts office location, which resulted 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 and the payment of an early termination fee of $8,761. 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.