Leases

3 Months Ended

Sep. 29, 2019

The Company primarily leases manufacturing, office and warehousing space. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, as well as non-lease components incurred with respect to actual terms rather than contractually fixed amounts.

The Company does not have any finance lease arrangements.

Accounting Policy

At lease inception, the Company determines a contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In evaluating whether it has the right to control the use of an identified asset, the Company assesses whether they have the right to direct the use of the identified asset and to obtain substantially all of the economic benefit from the use of the identified asset.

Right-of-use assets represent the Company's right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Assets and liabilities are recognized based on the present value of lease payments over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more. The exercise of the renewal option is at the Company's sole discretion and the Company considers these options in determining the lease term used to establish its right-of-use assets and lease liabilities.

Because most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Operating lease expense is generally recognized on a straight-line basis over the lease term.

The Company has agreements with lease and non-lease components, which are accounted for as a single lease component. Leases with a lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Variable lease payment amounts that cannot be determined at the commencement of the lease, such as increases in lease payments based on changes in index rates, are not included in the right-of-use assets or liabilities. These variable lease payments are expensed as incurred.

Balance Sheet

Lease assets and liabilities as of September 29, 2019, and the corresponding balance sheet classifications, are as follows (in millions of U.S. Dollars):



Category	Balance Sheet Classification	Amount
Right-of-use asset	Other assets		$11.4
Current lease liability	Other current liabilities	5.3
Non-current lease liability	Other long-term liabilities	6.0

Statement of Operations

Operating lease expense was $1.4 million for three months ended September 29, 2019. Short-term lease expense, variable lease expense and lease income were immaterial for the three months ended September 29, 2019.

Cash Flows

Cash flow information consisted of the following:



	Three months ended
(in millions of U.S. Dollars)	September 29, 2019
Cash used in operating activities:
Cash paid for operating leases		$1.5
Non-cash operating activities:
Lease additions due to adoption of ASC 842	12.2
Lease modifications, net	0.5

Lease Liability Maturities

Maturities of lease liabilities as of September 29, 2019 were as follows:



Fiscal Years Ending	(in millions of U.S. Dollars)
June 28, 2020 (remainder of fiscal 2020)		$4.7
June 27, 2021	3.6
June 26, 2022	2.4
June 25, 2023	1.0
June 30, 2024	0.2
Thereafter	—
Total lease payments	11.9
Imputed lease interest	(0.6		)
Total lease liabilities		$11.3

As of September 29, 2019, the weighted average remaining lease term was 31 months and the weighted average discount rate was 3.79%.

As previously disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2019 and under the previous lease accounting standard ASC 840, the aggregate future non-cancelable minimum rental payments on its operating leases as of June 30, 2019, were as follows:



Fiscal Years Ending	(in millions of U.S. Dollars)
June 28, 2020		$4.1
June 27, 2021	2.3
June 26, 2022	1.2
June 25, 2023	0.7
June 30, 2024	—
Thereafter	—
Total future minimum rental payments		$8.3