XML 29 R19.htm IDEA: XBRL DOCUMENT

Leases

9 Months Ended

Jun. 30, 2021

12. Leases

On October 1, 2019, the Company adopted FASB ASC 842 on a modified retrospective basis, which amended the accounting standards for leases. Accordingly, the Company applied the new guidance as of the date of adoption with a cumulative-effect adjustment recorded through equity. Prior periods have not been restated as a result of the adoption. Retained earnings decreased $87.8 million due to the adoption, primarily from impairment of the right-of-use assets associated with office building leases.

The Company also applied transition elections that allow it to avoid reassessment of lease definition, classification, or direct costs relating to expired or expiring leases. Adoption of the new lease guidance did not significantly change the Company’s accounting for finance leases, which were previously referred to as capital leases.

The Company and its subsidiaries are lessees in non-cancelable leasing agreements for office buildings and equipment. Substantially all of the Company’s office building leases are operating leases, and its equipment leases are both operating and finance leases. The Company groups lease and non-lease components for its equipment leases into a single lease component but separates lease and non-lease components for its office building leases.

The Company recognizes a right-of-use asset and lease liability for its operating leases at the commencement date equal to the present value of the contractual minimum lease payments over the lease term. The present value is calculated using the rate implicit in the lease, if known, or the Company’s incremental secured borrowing rate. The discount rate used for operating leases is primarily determined based on an analysis the Company’s incremental secured borrowing rate, while the discount rate used for finance leases is primarily determined by the rate specified in the lease.

The related lease payments are expensed on a straight-line basis over the lease term, including, as applicable, any free-rent period during which the Company has the right to use the asset. For leases with renewal options where the renewal is reasonably assured, the lease term, including the renewal period, is used to determine the appropriate lease classification and to compute periodic rental expense. Leases with initial terms shorter than 12 months are not recognized on the balance sheet, and lease expense is recognized on a straight-line basis.

The components of lease expenses are as follows:


	Three Months Ended				Nine Months Ended
	June 30,2021		June 30,2020		June 30,2021		June 30,2020

	(in millions)
Operating lease cost	$	46.3	$	49.3	$	141.0	$	144.7
Finance lease cost:
Amortization of right-of-use assets		3.9		4.2		10.3		13.9
Interest on lease liabilities		0.6		0.4		1.8		1.4
Variable lease cost		8.5		8.8		27.2		27.1
Total lease cost	$	59.3	$	62.7	$	180.3	$	187.1

Additional balance sheet information related to leases is as follows:


		As of		As of
(in millions except as noted)	Balance Sheet Classification	June 30,2021		September 30, 2020
Assets:
Operating lease assets	Operating lease right-of-use assets	$	637.3	$	652.1
Finance lease assets	Property and equipment – net		41.1		29.1
Total lease assets		$	678.4	$	681.2

Liabilities:
Current:
Operating lease liabilities	Accrued expenses and other current liabilities	$	162.8	$	168.4
Finance lease liabilities	Current portion of long-term debt		14.1		9.8
Total current lease liabilities		$	176.9	$	178.2

Non-current:
Operating lease liabilities	Operating lease liabilities, noncurrent		711.5		745.3
Finance lease liabilities	Long-term debt		30.5		22.0
Total non-current lease liabilities		$	742.0	$	767.3


	As of		As of
	June 30, 2021		September 30, 2020
Weighted average remaining lease term (in years):
Operating leases	7.0		7.3
Finance leases	3.3		3.3
Weighted average discount rates:
Operating leases	4.4	%	4.6	%
Finance leases	4.6	%	4.7	%

Additional cash flow information related to leases is as follows:


	Nine Months Ended
	June 30,		June 30,
	2021		2020

	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	165.9	$	168.3
Operating cash flows from finance leases		1.5		1.3
Financing cash flows from finance leases		10.1		11.9
Right-of-use assets obtained in exchange for new operating leases		77.3		90.8
Right-of-use assets obtained in exchange for new finance leases		22.2		17.5

Total remaining lease payments under both the Company’s operating and finance leases are as follows:


	Operating Leases		Finance Leases

Fiscal Year	(in millions)
2021 (three months remaining)	$	53.0	$	3.9
2022		188.6		15.6
2023		155.0		13.4
2024		132.9		9.8
2025		113.0		4.5
Thereafter		376.1		0.8
Total lease payments	$	1,018.6	$	48.0
Less: Amounts representing interest	$	(144.3)	$	(3.4)
Total lease liabilities	$	874.3	$	44.6