Leases

3 Months Ended

Sep. 30, 2022

Our operating lease portfolio is primarily comprised of showrooms, which expire at various dates through fiscal year 2030. We have no financing leases. Certain operating lease agreements include rental payments adjusted periodically for inflationary indices. Additionally, some leases include options to renew or terminate the leases which can be exercised at our discretion. Lease terms include the noncancellable portion of the underlying leases along with any reasonably certain lease periods associated with available renewal periods.

Certain leases have terms that are dependent upon the occurrence of events, activities, or circumstances in lease agreements and incur variable lease expense driven by warehouse square footage utilized, property taxes assessed, and other non-lease component charges. Variable lease expense is presented as operating expense in our Condensed Consolidated Statements of Operations in the same line item as expense arising from fixed lease payments for operating leases. For all classes of assets, we do not separate non-lease components of a contract from the lease components to which they relate. We do not recognize a right-of-use asset or lease liability for short-term leases that have a lease term of twelve months or less.

The components of our lease expenses are as follows:


	Three Months Ended
	September 30
(Amounts in Millions)	2022		2021
Operating lease expense	$	1.3	$	1.2

Variable lease expense	1.7		1.4
Total lease expense	$	3.0	$	2.6

Right-of-use assets for operating leases are tested for impairment in the same manner as long-lived assets used in operations as explained in Note 12 - Fair Value of Notes to Condensed Consolidated Financial Statements. During the first three months of fiscal year 2023 we had no lease impairment, however for the first three months of fiscal year 2022 we recorded $0.7 million of right-of-use asset and associated leasehold improvement impairments. The impairment charge is included in the Restructuring Expense line item on our Condensed Consolidated Statements of Operations. See Note 3 - Restructuring of Notes to Condensed Consolidated Financial Statements for more information on the impairment.

Supplemental cash flow and other information related to leases are as follows:


	Three Months Ended
	September 30
(Amounts in Millions)	2022			2021
Cash flow information:
Operating lease payments impacting lease liability	$	1.6		$	1.7
Non-cash impact of obtaining new right-of-use assets	$	1.5		$	—

	As of
	September 30
	2022			2021
Other information:
Weighted-average remaining term (in years)	4.6			4.1
Weighted-average discount rate	4.5		%	4.6		%

The following table summarizes the future minimum lease payments as of September 30, 2022:


	Fiscal Year Ended
(Amounts in Millions)	June 30 (1)
2023	$	4.6
2024	4.4
2025	3.8
2026	2.8
2027	2.1
Thereafter	2.1
Total lease payments	$	19.8
Less interest	1.9
Present value of lease liabilities	$	17.9

(1) Lease payments include options to extend lease terms that are reasonably certain of being exercised. The payments exclude legally binding minimum lease payments for leases signed but not yet commenced. At September 30, 2022, we have additional operating leases that have not yet commenced for which we will record both right-of-use assets and lease liabilities of $9.9 million. Two of the leases are expected to commence in our second quarter of fiscal year 2023 with lease terms of approximately 3 years at a total of $0.3 million. A third lease is expected to commence in our third quarter of fiscal year 2023 with a lease term of approximately 10 years at $5.7 million, while a fourth lease is expected to commence in our fourth quarter of fiscal year 2023 with a lease term of approximately 12 years at $3.9 million.