Leases

12 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

NOTE 10. LEASES

On July 1, 2019, the Company adopted ASU 2016-02 on a modified retrospective basis and recognized a $9 million cumulative-effect adjustment to the opening balance of Accumulated deficit related to previous sale leaseback transactions.

Summary of leases

The Company's operating leases primarily consist of real estate, including office space, warehouse space and printing facilities, and satellite transponders. During the fourth quarter of fiscal 2020, the Company modified its contract related to its satellite transponders which resulted in certain transponders being classified as finance leases. Certain leases for satellite transponders were determined to be operating leases in accordance with ASU 2016-02. The Company’s operating leases generally include options to extend the lease term or terminate the lease. Such options do not impact the Company’s lease term assessment until the Company is reasonably certain that the option will be exercised. 

Certain of the Company’s leases include rent adjustments which may be indexed to various metrics, including the consumer price index or other inflationary indexes. As a general matter, the Company’s real estate lease arrangements typically require adjustments resulting from changes in real estate taxes and other costs to operate the leased asset.

Other required lease disclosures

The total lease cost for operating and finance leases included in the Statements of Operations was as follows:

		For the fiscal years ended June 30,
		2022		2021		2020
	Income Statement Location	(in millions)
Operating lease costs	Selling, general and administrative	$	125	$	135	$	139
Operating lease costs	Operating expenses	36		37		64
Finance lease costs	Depreciation and amortization	27		27		6
Finance lease costs	Interest expense, net	3		4		1
Short term lease costs	Operating expenses	12		15		9
Variable lease costs	Selling, general and administrative	24		28		41
Total lease costs		$	227	$	246	$	260

Additional information related to the Company’s operating and finance leases under ASU 2016-02:

	As of June 30, 2022				As of June 30, 2021
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Weighted-average remaining lease term	11.0 years		2.8 years		11.8 years		3.7 years
Weighted-average incremental borrowing rate	3.56	%	3.64	%	3.54	%	3.64	%

	For the fiscal years ended June 30,
	2022		2021
	(in millions)
Cash paid - Operating lease liabilities	$	182	$	184
Cash paid - Finance lease liabilities - principal	27		30
Cash paid - Finance lease liabilities - interest	3		4
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	72		25

Future minimum lease payments as of June 30, 2022 are as follows:

	As of June 30, 2022
	Operating Leases		Finance Leases
	(in millions)
Fiscal 2023	$	172	$	29
Fiscal 2024	157		26
Fiscal 2025	143		15
Fiscal 2026	126		—
Fiscal 2027	120		—
Thereafter	614		—
Total future minimum lease payments	$	1,332	$	70
Less: interest	(246)		(3)
Present value of minimum payments	$	1,086	$	67

Leases

NOTE 10. LEASES

On July 1, 2019, the Company adopted ASU 2016-02 on a modified retrospective basis and recognized a $9 million cumulative-effect adjustment to the opening balance of Accumulated deficit related to previous sale leaseback transactions.

Summary of leases

The Company's operating leases primarily consist of real estate, including office space, warehouse space and printing facilities, and satellite transponders. During the fourth quarter of fiscal 2020, the Company modified its contract related to its satellite transponders which resulted in certain transponders being classified as finance leases. Certain leases for satellite transponders were determined to be operating leases in accordance with ASU 2016-02. The Company’s operating leases generally include options to extend the lease term or terminate the lease. Such options do not impact the Company’s lease term assessment until the Company is reasonably certain that the option will be exercised. 

Certain of the Company’s leases include rent adjustments which may be indexed to various metrics, including the consumer price index or other inflationary indexes. As a general matter, the Company’s real estate lease arrangements typically require adjustments resulting from changes in real estate taxes and other costs to operate the leased asset.

Other required lease disclosures

The total lease cost for operating and finance leases included in the Statements of Operations was as follows:

		For the fiscal years ended June 30,
		2022		2021		2020
	Income Statement Location	(in millions)
Operating lease costs	Selling, general and administrative	$	125	$	135	$	139
Operating lease costs	Operating expenses	36		37		64
Finance lease costs	Depreciation and amortization	27		27		6
Finance lease costs	Interest expense, net	3		4		1
Short term lease costs	Operating expenses	12		15		9
Variable lease costs	Selling, general and administrative	24		28		41
Total lease costs		$	227	$	246	$	260

Additional information related to the Company’s operating and finance leases under ASU 2016-02:

	As of June 30, 2022				As of June 30, 2021
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Weighted-average remaining lease term	11.0 years		2.8 years		11.8 years		3.7 years
Weighted-average incremental borrowing rate	3.56	%	3.64	%	3.54	%	3.64	%

	For the fiscal years ended June 30,
	2022		2021
	(in millions)
Cash paid - Operating lease liabilities	$	182	$	184
Cash paid - Finance lease liabilities - principal	27		30
Cash paid - Finance lease liabilities - interest	3		4
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	72		25

Future minimum lease payments as of June 30, 2022 are as follows:

	As of June 30, 2022
	Operating Leases		Finance Leases
	(in millions)
Fiscal 2023	$	172	$	29
Fiscal 2024	157		26
Fiscal 2025	143		15
Fiscal 2026	126		—
Fiscal 2027	120		—
Thereafter	614		—
Total future minimum lease payments	$	1,332	$	70
Less: interest	(246)		(3)
Present value of minimum payments	$	1,086	$	67