LEASES
The Company leases various property, plant and equipment, including office, warehousing, manufacturing and research and development facilities and equipment. These leases have remaining lease terms of up to 32 years, inclusive of renewal or termination options that the Company is reasonably certain to exercise. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Supplemental balance sheet information related to the Company’s leases as of June 30 was as follows: | | | | | | | | | | | | | | |
| Balance sheet classification | 2025 | | 2024 |
| Operating leases | | | | |
| Right-of-use assets | Operating lease right-of-use assets | $ | 333 | | | $ | 360 | |
| Current lease liabilities | Current operating lease liabilities | $ | 87 | | | $ | 84 | |
| Non-current lease liabilities | Long-term operating lease liabilities | 305 | | | 334 | |
| Total operating lease liabilities | | $ | 392 | | | $ | 418 | |
| | | | |
| Finance leases | | | | |
| Right-of-use assets | Other assets | $ | 35 | | | $ | 33 | |
| Current lease liabilities | Accounts payable and accrued liabilities | $ | 15 | | | $ | 13 | |
| Non-current lease liabilities | Other liabilities | 21 | | | 21 | |
| Total finance lease liabilities | | $ | 36 | | | $ | 34 | |
Components of lease cost were as follows for the fiscal years ended June 30: | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | 2025 | | 2024 | | 2023 |
| Operating lease cost | | $ | 99 | | | $ | 97 | | | $ | 89 | |
| Finance lease cost: | | | | | | |
| Amortization of right-of-use assets | | $ | 15 | | | $ | 11 | | | $ | 9 | |
| Interest on lease liabilities | | 2 | | | 1 | | | 1 | |
| Total finance lease cost | | $ | 17 | | | $ | 12 | | | $ | 10 | |
| Variable lease cost | | $ | 56 | | | $ | 94 | | | $ | 87 | |
| Short term lease cost | | $ | 5 | | | $ | 3 | | | $ | 4 | |
Supplemental cash flow information and noncash activity related to the Company’s leases were as follows during fiscal years ended June 30: | | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | |
| Operating cash flows from operating leases, net | $ | 97 | | | $ | 97 | | | $ | 88 | |
| Operating cash flows from finance leases | 2 | | | 1 | | | 1 | |
| Financing cash flows from finance leases | 15 | | | 11 | | | 8 | |
| Right-of-use assets obtained in exchange for lease obligations: | | | | | |
| Operating leases | $ | 56 | | | $ | 113 | | | $ | 84 | |
| Finance leases | 17 | | | 17 | | | 21 | |
Weighted-average remaining lease term and discount rate for the Company’s leases were as follows as of fiscal year ended June 30: | | | | | | | | | | | |
| 2025 | | 2024 |
| Weighted-average remaining lease term: | | | |
| Operating leases | 5 years | | 5 years |
| Finance leases | 3 years | | 3 years |
| Weighted-average discount rate: | | | |
| Operating leases | 4.1 | % | | 3.6 | % |
| Finance leases | 4.9 | % | | 5.1 | % |
Maturities of lease liabilities by fiscal year for the Company’s leases as of June 30, 2025 were as follows: | | | | | | | | | | | |
| Year | Operating leases | | Finance leases |
| 2026 | $ | 101 | | | $ | 16 | |
| 2027 | 94 | | | 11 | |
| 2028 | 82 | | | 5 | |
| 2029 | 68 | | | 5 | |
| 2030 | 51 | | | 2 | |
| Thereafter | 36 | | | — | |
| Total lease payments | $ | 432 | | | $ | 39 | |
| Less: Imputed interest | 40 | | | 3 | |
| Total lease liabilities | $ | 392 | | | $ | 36 | |
Operating and finance lease payments presented in the table above exclude $0 and $10, respectively, of minimum lease payments signed but not yet commenced as of June 30, 2025.
On December 14, 2023, the Company completed an asset sale-leaseback transaction on a warehouse in Fairfield, California. The Company received proceeds of $19, net of selling costs. The asset had a carrying value of $3 and the transaction resulted in a $16 gain, which was recognized in Other (income) expense, net in the Health and Wellness segment. The leaseback is accounted for as an operating lease. The term of the lease is 8 years with options to extend the lease for two 5 year periods.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.