Leases

6 Months Ended

Jun. 30, 2019

The Company determines if an arrangement is a lease at inception by evaluating if the asset is explicitly or implicitly identified or distinct, if the Company will receive substantially all of the economic benefit or if the lessor has an economic benefit and the ability to substitute the asset. Operating leases are included in other long-term assets, accrued liabilities and other, and other long-term liabilities.

ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of fixed and known lease payments over the lease term. Variable payments are not included in the ROU asset or lease liability and can vary from period to period based on the use of an asset during the period or the Company's proportionate share of common costs. As 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 commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and lease expense for these leases is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease components and non-lease components. The Company has elected to apply the practical expedient to account for these components as a single lease component, for all classes of underlying assets.

Lease Costs, Assets and Liabilities

The Company has operating leases primarily for manufacturing facilities, warehouses, offices and certain equipment. These leases have remaining lease terms of one to 13 years, some of which include one or more options to renew, with renewal terms that can extend the leases to one or 20 years or more. The components of lease cost follow:


(in millions)	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost	$	6.8	$	13.2
Variable lease cost	1.8		3.3
Short-term lease cost	0.8		1.5
Total lease cost	$	9.4	$	18.0

A summary of lease assets and liabilities follows:


(in millions)	June 30, 2019
Assets:
Operating lease right-of-use assets¹	$	79.0
Liabilities:
Operating lease liabilities - current²	21.6
Operating lease liabilities - long-term³	63.3
Total lease liabilities	$	84.9

^1.Included in other long-term assets.

^2.Included in accrued liabilities and other.

^3.Included in other long-term liabilities.

Maturity of lease liabilities as of June 30, 2019, follow:


(in millions)	Remainder of 2019		2020		2021		2022		2023		2024		Thereafter		Total
Lease payments	$	13.5	$	20.2	$	15.0	$	11.1	$	8.6	$	6.4	$	22.9	$	97.7
Less: imputed interest															(12.8)
Total lease liabilities															$	84.9

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments for non-cancelable operating leases in future years would have been as follows:


(in millions)	2019		2020		2021		2022		2023		Thereafter
Future minimum lease payments	$	16.7	$	10.8	$	6.8	$	4.9	$	4.2	$	5.1

Lease Term and Discount Rate


	June 30, 2019
Operating leases:
Weighted-average remaining lease term (in years)	6.6
Weighted-average discount rate	3.9	%

Supplemental Cash Flow Information

Cash paid for amounts included in the measurement of operating lease liabilities totaled $13.4 million for the six months ended June 30, 2019. Operating lease right-of-use assets obtained in exchange for new operating lease liabilities totaled $87.4 million for the six months ended June 30, 2019, of which $69.1 million related to the adoption of ASC 842.