Leases

3 Months Ended

Dec. 31, 2019

Leases

Leases

Note 9 — Leases

In the first quarter of fiscal 2020, we adopted ASC 842. See “Note 1—Summary of Significant Accounting Policies” for the impacts of adoption. Our primary involvement with leases is in the capacity as a lessee where we lease properties to support our business. A majority of our leases are operating leases of office space. For these leases, we have elected to account for the lease and non-lease components together as a single lease component. Our operating leases expire at various dates through 2030 without taking into consideration available renewal options, and many of them require variable lease payments by us for property taxes, insurance premiums, common area maintenance and other costs. Certain of these leases also have extension or termination options, and we assess the likelihood of exercising such options. If it is reasonably certain that we will exercise the options, we include the impact in the measurement of our right-of-use assets and lease liabilities.

Our right-of-use assets for operating leases are included in operating lease right-of-use-assets on our Condensed Consolidated Balance Sheets. Our lease liabilities for operating leases are included in other current liabilities for the current portion and in operating lease liabilities for the long-term portion. We use our incremental borrowing rate in determining the present value of lease payments. Our operating lease expense is included in costs and expenses in our consolidated statements of operations. Total operating lease expense consists of operating lease cost, which is recognized on a straight-line basis over the lease term, and variable lease cost, which is recognized based on actual amounts incurred. We also sublease certain properties and sublease income is included as a reduction of rental expense.

The following tables present our operating leases, related lease expenses, and other information (dollars in millions):

Operating Lease Portfolio

	December 31,
	2019
Right-of-use assets	$	80.7
Lease liabilities		89.0
Weighted average remaining lease term		6.9 years
Weighted average discount rate		2.98%

Operating Lease Expense

	Three Months Ended
	December 31,
	2019
Operating lease expense	$	4.6
Short-term lease expense		0.4
Variable lease expense		1.1
Total lease expense	$	6.1

Other Information

	Three Months Ended
	December 31,
	2019
Cash paid for amounts included in the measurement of lease liabilities	$	4.5
Right-of-use assets obtained in exchange for new operating lease liabilities		9.6

Maturities of Lease Liabilities

Our future minimum lease commitments of our operating leases on an undiscounted basis, reconciled to the lease liability at December 31, 2019 were as follows (in millions):

2020	$	13.5
2021		16.2
2022		14.0
2023		12.0
2024		11.2
Thereafter		32.1
Total lease payments		99.0
Less: imputed interest		(10.0)
Present value of operating lease liabilities	$	89.0

In fiscal 2019, we entered into agreements related to the construction and leasing of two buildings on our existing corporate campus in San Diego, California. Under these agreements, we will act as the construction agent, a financial institution will own the buildings and we will lease the property for a term of five years upon their completion expected in December 2020. The terms of the agreements include provisions that require and/or limit, among other financial ratios and measurements, the permitted levels of debt, coverage of cash interest expense, and under certain circumstances, payments of dividends or other distributions to shareholders. As of December 31, 2019, these agreements have no restrictions on distributions to shareholders, subject to certain tests in these agreements.